UAE Exchange bids for finance company Dunia

UAE Exchange, a global remittance and foreign exchange business headquartered in Abu Dhabi, is among bidders for consumer finance company Dunia, sources familiar with the matter said.

Dubai shopping mall developer Majid Al Futtaim was among other parties to have lodged initial bids for Dunia, which had been due to be submitted two weeks ago, while there could also be interest from local banks, according to one of the sources, a United Arab Emirates-based banker.

Bloomberg reported last month that private equity group KKR was considering a bid, but a source familiar with the matter said that no bid had been lodged.

KKR has been seeking investments in the Middle East and is close to securing its first in the region, a deal to buy a stake in retailer Azadea, sources told Reuters in June.

Shareholders of Dunia are said to be targeting three times book value, which would give the company a price of more than Dhs 2.5bn ($680m), said the UAE-based banker.

Current Dunia shareholders include Fullerton Financial Holdings — a wholly-owned subsidiary of Singapore sovereign investor Temasek Holdings — as well as Abu Dhabi state investment firm Mubadala and private equity house Waha Capital .

Dunia and the three existing shareholders declined to comment, as did KKR and Morgan Stanley, which is advising Dunia. UAE Exchange and Majid Al Futtaim both said they do not comment on market speculation.

UAE Exchange, owned through a 60/40 percent split between Abu Dhabi-based investment company Centurion Investments and Indian billionaire Bavaguthu Raghuram Shetty, has been rapidly expanding in recent times.

A consortium led by Shetty and Centurion agreed in May 2014 to buy global foreign exchange operator Travelex for about 800m pounds ($1.25bn), with Shetty telling Reuters in January it would merge Travelex with UAE Exchange.

UAE Exchange’s bid for Dunia was described as “aggressive” by one Abu Dhabi-based source, with the same source indicating the business would be folded into UAE Exchange, if it was ultimately successful.

Those who have submitted first-round bids were now awaiting feedback from Dunia and Morgan Stanley, with a preferred bidder likely to be identified who would then proceed with due diligence, said the UAE banker and the Abu Dhabi source.

UAE Exchange has yet to pick an adviser, although it has spoken to banks and is expected to make a decision in the next two weeks, according to one Dubai-based banker.

Dunia Finance reported net profit of 119.6 million dirhams in the first six months of this year, compared with 72.7 million in the year earlier period. The company had total assets of 1.97 billion dirhams, financial statements show.