News broke recently of The Western Union Company announcing a definitive agreement to acquire a minority stake in Saudi Arabia’s stc pay.
stc pay is a fully owned subsidiary of telecom giant Saudi Telecom Company (or commonly known as stc). As said in a statement, Western Union will invest up to $200 million for up to 15% ownership of the company, valuing stc pay at over $1 billion. stc Group chairman Mohammed bin Khalid Abdullah Al Faisal highlighted that the deal created the first “Saudi unicorn and the first fintech unicorn in the Middle East”
In conjunction with the investment, the companies extended the terms of their commercial relationship. The Company currently partners with stc pay, providing money transfer services that allow stc pay’s users to send money from its app to 200+ countries and territories in 130+ currencies through Western Union’s extensive global network of accounts, wallets, cards and retail.
stc pay has rapidly developed into a leading digital wallet service in Saudi Arabia, a young and quickly developing market which offers huge potential for digital services. With a strong base of over 4 million customers and an established regional brand in the fast-growing digital wallet market, Western Union believes that stc pay is poised to experience strong growth in the future.
Western Union operates a strong and resilient global business across digital and retail channels, achieving significant progress in its digital growth strategy in 2020 through both its market leading westernunion.com channel and digital partnerships. In the third quarter of 2020, digital revenues increased 45% year-over-year, representing 21% of Western Union’s consumer business, and trended at an annual rate of over $900 million.
Various comments across both Western Union and stc praised and commend the stronger partnership:
Hikmet Ersek, CEO of Western Union said, “I am extremely pleased with the progress of Western Union’s digital growth strategy this year. A key element of this strategy is partnering with innovative financial companies to expand services for their customers and drive incremental growth for Western Union. Our strategy has proven to be successful, and I am encouraged by the meaningful contribution our partnership with stc pay made to Western Union’s digital growth in 2020.
Jean Claude Farah, President, Global Network at Western Union commented, “We are very excited about this investment in stc pay because of our demonstrated success working together. We believe the company is well positioned for continued growth and expansion into new digital payment services in the Gulf region. This is a great opportunity to participate in the growth potential of an innovative and dynamic financial services company such as stc pay and supporting its growing customer base through our market leading cross-border services.”
Nasser Alnasser, stc group CEO said, “As a digital enabler and a pioneer in the digital transformation, we aspire to play a vital role in the vision of the Saudi Arabian Monetary Authority (SAMA) in many initiatives that support creativity and developing the financial services, as Fintech is a pillar of stc strategy. We are proud that stc pay has not only reached unicorn status but also has been recognized as a fintech national champion in a very short time, and that motivates us to devote more efforts to provide more products to enhance the customer’s experience.”
Commenting on the transaction, stc pay CEO Ahmed Alenazi said, “We are delighted that such a prestigious and visionary company as Western Union has identified stc pay as a company with such strong prospects. We are grateful for their appreciation of the strength of the brand and the business we are growing. Their focus on customers’ changing needs and the drive for innovation makes them the ideal partner for our next period of growth.”
The transaction is expected to close in the first quarter next year, subject to receiving all regulatory approvals. News of stc pay gives Saudi Arabia, as mentioned earlier, its first unicorn. In terms of fintech directly, it would in effect be the first in the Arab-speaking Middle East after Egypt recently made headlines with Farwy hitting unicorn status as well.
In the Middle East as a whole, in terms of both fintech and beyond, Israel is home to various. In the fintech space it was the birthplace of Payoneer for example (which is headquartered in New York City) and tech as a whole such as Waze (acquired by Google); at present there are seven in the country. The United Arab Emirates (UAE) in terms of wider tech has been the birthplace of souq.com and Careem, both of which have been acquired with Amazon.com with the former and Uber with the ladder; the UAE currently has one unicorn.