Transferwise aims to slash cost of sending cash home for Gulf expats

The lion’s share of Gulf outward remittances head to South Asia. (AFP)
Updated 22 October 2019

Transferwise aims to slash cost of sending cash home for Gulf expats

  • Transferwise targeting multi-billion-dollar Middle East money transfer market with a new hub planned for Abu Dhabi
  • The lion’s share of Gulf outward remittances head to South Asia

LONDON: A UK-based money transfer companies aims to slash the cost of sending cash home for hundreds of thousands of expatriates across the Arab world.

Transferwise is targeting the multi-billion-dollar Middle East money transfer market with a new hub planned for Abu Dhabi that aims to offer an alternative to sometimes costly bank transfers.

Money transfer businesses have mushroomed across the Gulf states and are used by the region’s army of expatriate workers to send funds home each month from Mumbai to Manila. But a raft of new technology startups is rapidly disrupting the sector and driving money transfer costs lower.

UK-based Transferwise, started in 2011 by Estonian entrepreneurs 2011 Kristo Käärmann and Taavet Hinrikus, processes remittances by using two local transfers instead of one international one — avoiding expensive banking fees.

“Money transfers from dirhams have long been one of our most wished for currencies, so we always knew we’d begin our expansion into the Middle East in the Emirates,” said Kristo Käärmann, CEO and co-founder of TransferWise. “The latest World Bank data shows an uptick in the cost of sending money from the Middle East, and there’s such a strong expat community locally who desperately need a better way to manage their money across borders.”

The company has been granted a license to bring its money transfer platform to the UAE and its local unit will be regulated by the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority, it said in a statement on Tuesday.

The company, which serves 6 million customers worldwide, claims to offer money transfers that are up to eight times cheaper the banks in its biggest markets.

It processes $5 billion in customer payments every month and it says that 25 percent of its international transfers are instant.

The company reported revenues of £179 million in the fiscal year ending March 2019, and net profits of £10.3 million. Its backers include Richard Branson and PayPal.

The lion’s share of Gulf outward remittances head to South Asia. Global remittances to South Asia grew 12 percent to $131 billion in 2018, according to World Bank data. That compared to 6 percent growth in 2017.

“The upsurge was driven by stronger economic conditions in the US and a pickup in oil prices, which had a positive impact on outward remittances from some GCC countries,” said the World Bank’s latest Migration and Development Brief.

It estimated that officially recorded annual remittance flows to low- and middle-income countries reached $529 billion in 2018. Global remittances, which include flows to high-income countries, reached $689 billion in 2018, up from $633 billion in 2017.

However, the global average cost of sending $200 remained high, at around 7 percent in the first quarter of 2019, according to the World Bank’s Remittance Prices Worldwide database.


Saudi Aramco shares soar at maximum 10% on market debut

Updated 11 December 2019

Saudi Aramco shares soar at maximum 10% on market debut

  • Company is now world’s largest publicly traded company, bigger than Apple

RIYADH: Saudi Aramco shares opened at 35.2 riyals ($9.39) on Wednesday at the Kingdom’s stock exchange, 10 percent above their IPO price of 32 riyals, in their first day of trading following a record $26.5 billion initial public offering.
Aramco has earlier priced its IPO at 32 riyals ($8.53) per share, the high end of the target range, surpassing the $25 billion raised by Chinese retail giant Alibaba in its 2014 Wall Street debut.
Aramco’s earlier indicative debut price was seen at 35.2 riyals, 10 per cent above IPO price, raising the company’s valuation to $1.88 trillion, Refintiv data showed.
At that price, Aramco is world’s most valuable listed company. That’s more than the top five oil companies – Exxon Mobil, Total, Royal Dutch Shell, Chevron and BP – combined.
“Today Aramco will become the largest listed company in the world and (Tadawul) among the top ten global financial markets,” Sarah Al-Suhaimi, chairwoman of the Saudi Arabian stock exchange, said during a ceremony marking the oil giant’s first day of trading.
“Aramco today is the largest integrated oil and gas company in the world. Before Saudi Arabia was the only shareholder of the company, now there are 5 million shareholders including citizens, residents and investors,” said Yasir Al-Rumayyan, the managing director and chief executive of the Saudi Public Investment Fund.
“Aramco’s IPO will enhance the company’s governance and strengthen its standards.”
Amin Nasser, the president and CEO of Saudi Aramco, meanwhile thanked the new shareholders for their confidence and trust of the oil company.
The sale of 1.5 percent of the firm, or three billion shares, is the bedrock of Crown Prince Mohammed bin Salman’s ambitious strategy to overhaul the oil-reliant economy.
Riyadh’s Tadawul stock exchange earlier said it will hold an opening auction for Aramco shares for an hour from 9:30 a.m. followed by continuous trading, with price changes limited to plus or minus 10 percent.

The company said Friday it could exercise a “greenshoe” option, selling additional shares to bring the total raised up to $29.4 billion.
The market launch puts the oil behemoth’s value at $1.7 trillion, far ahead of other firms in the trillion-dollar club, including Apple and Microsoft.
Two-thirds of the shares were offered to institutional investors. Saudi government bodies accounted for 13.2 percent of the institutional tranche, investing around $2.3 billion, according to lead IPO manager Samba Capital.
The IPO is a crucial part of Prince Mohammed’s plan to wean the economy away from oil by pumping funds into megaprojects and non-energy industries such as tourism and entertainment.
Watch the video marking Aramco’s opening trading: