First Abu Dhabi Bank
FAB's deal with Brookfield implies an 'up to' $1.15 billion valuation for Magnati, which was set up as the payments processing arm of the Abu Dhabi bank. Image Credit: Gulf News archive

Dubai: The First Abu Dhabi Bank has sold a 60 per cent stake in its payments processing business Magnati, selling it to Brookfield Business Partners and its institutional partners. The transaction provides Magnati with an implied valuation of up to $1.15 billion.

This deal follows the completion of the carve-out of Magnati, which was announced on April 4, 2021. FAB will retain the 40 per cent stake in Magnati post-transaction and "continue its partnership via a long-term relationship agreement". Upon completion, proceeds from the sale will be used to support FAB’s growth and transformation plans.

Brookfield had assets under management of $688 billion last year. A market leader for government solutions in the UAE, Magnati is among the "top two players" across direct acquiring, prepaid issuing, and issuer processing. Magnati will retain its headquarters in Abu Dhabi, while the transaction will result in "significant foreign direct investment into the UAE by a leading global asset manager".

The payments industry is experiencing unprecedented growth, creating new opportunities for agile, pioneering payment platforms. As a preferred payments partner to leading organisations, Magnati is well placed to benefit from this shift

- Jad Ellawn, Managing Director at Brookfield

FDI into Abu Dhabi

Hana Al Rostamani, Group CEO of FAB, said in a statement: “This announcement is the result of long-term planning to seek strategic partnerships to drive growth within the payments sector. Our partnership agreement with Brookfield will accelerate Magnati’s journey in a fast-paced and dynamic industry, creating broader value for all stakeholders.”

The FAB moves as it readies for the launch of a new digital bank - Wio - in the UAE. The other partners in the venture are Etisalat, ADQ and Alpha Dhabi.

Hana Al Rostamani
"This announcement is the result of long-term planning to seek strategic partnerships to drive growth within the payments sector," said Al Rostamani. Image Credit: Supplied

The carve-out of the payments business is part of "FAB’s digital transformation process and was designed to enhance FAB’s position in the payments sector and unlock growth opportunities in new geographies and client segments.

Morgan Stanley & Co. International acted as sole financial adviser to FAB, while Freshfields Bruckhaus Deringer was legal adviser to FAB on the transaction. Cleary Gottlieb Steen & Hamilton did the same for Brookfield.