Western Union (NYSE: WU) has reportedly acquired a 15% stake in Saudi Arabia’s Telecom’s digital payment division.
Western Union, which is notably the largest money transfer company in the world, has confirmed that it has purchased a $200 million (or 15%) stake in the online payment unit of Saudi Arabia’s STC Group.
The STC Pay acquisition values the firm at 5 billion Saudi Riyals (appr. $1.3 billion). According to the terms of the deal, STC Pay will continue to focus on its long-term expansion strategy.
Mohammed bin Khalid Abdullah Al Faisal, Chairperson at the STC Group, noted that the investment from Western Union confirms the firm’s position as a prominent “digital enabler.” Al Faisal added that the transaction has led to the establishment of the first “Saudi Unicorn and the first Fintech Unicorn in the Middle East.”
As reported by Reuters (which cited sources familiar with the matter), STC had hired several banks to set up and manage a potential initial sale of shares in its services development division, Solutions by STC.
The Saudi government has been focused on reducing the nation’s dependence on paper currency or the excessive use of cash to settle transactions. The country is currently in the process of modernizing and diversifying its economy which relied heavily on oil exports (which may no longer be as profitable in a post COVID world where the demand for oil has dropped considerably).
STC’s management noted that the firm’s STC Pay division is the first licensed Fintech company by the Saudi Arabian Monetary Authority, the Saudi reserve bank. The STC Pay platform claims over 4.5 million users.
As reported in March 2020, banking challenger Moven partnered with STC Pay to introduce new banking services for young people in Saudi Arabia. Ahmed Alenazi, CEO at STC Pay, and Brett King, Founder and CEO at Moven, had signed their partnership agreement earlier this year.
Moven’s operations were to be carried out through a license from the Electronic Money Institution, issued by the Saudi Arabian Monetary Authority and is part of STC Group, a leading telecommunications company in the Middle Eastern Kingdom.