DUBAI: Western Union, the world’s largest money transfer firm, has acquired a 15 percent stake in the digital payment unit of Saudi Arabia’s STC Group for $200 million.
The acquisition of STC Pay, which values the company at SR5 billion ($1.3 billion), will finance its capital and support long-term expansion plans, Saudi Arabia’s largest telecoms operator said in a statement on Saturday.
STC Group chairman Mohammed bin Khalid Abdullah Al-Faisal said the investment reflected the company’s position as a “digital enabler.” He said the deal created the first “Saudi unicorn and the first fintech unicorn in the Middle East.”
Unicorns are generally defined as private companies valued at $1 billion or more.
Upon completion of the deal, STC said Western Union will pay $133.3 million for a 10 percent stake in STC Pay. If STC Pay obtains a digital banking license, the buyer then pays another $66.67 million, increasing its equity stake to 15 percent.
Sources told Reuters last month that STC had hired banks to arrange a potential initial sale of shares in its product and services development arm, Solutions by STC.
Reducing dependence on cash is part of Saudi government efforts to modernize the Kingdom’s economy.
STC said its STC Pay unit is the first licensed fintech company by the Saudi Arabian Monetary Authority and has more than 4.5 million users.
In harmony with the Kingdom’s Vision 2030 to progress and diversify digital services, it aims to become a pioneering service. It is an integrated payment application that covers an individual’s daily needs.
Launched in late 2018, STC Pay’s mobile wallet offers different digital financial services to consumers including peer-to-peer money transfer service (between its users), transfers to bank accounts, payments at partner stores with QR codes, payment of utility bills, and international money transfers that are powered by Western Union.