Abu Dhabi’s IHC invests $200m in Colombian digital bank Lulo

Supplied

• Buyers’ market for takeovers activity due to global market turbulence
• IHC also expanding investments in the UK, India, and Turkey 
• Fintech ecosystem in Latin America risen over past couple of years

International Holding Company, the Abu Dhabi-based conglomerate, has announced a capital investment of $200 million in Lulo Colombia, the holding company of Colombia’s first regulated digital bank, Lulo Bank.

Lulo Bank is Columbia’s first fully digitalised bank and has signed up more than 120,000 active users since it was launched in June and is set to complete more than 200,000 users applications before the end of 2022. 

The bank aims to achieve a customer base of one million in Colombia within the next three years.

It’s the latest stake acquisition by IHC, which said in August it expects to increase its takeover activity, including in India and Turkey, as global market turbulence has created “a buyers’ market”.

• Abu Dhabi’s International Holding Co. is ‘next Berkshire Hathaway’
• Abu Dhabi’s IHC eyes more takeovers in India and Turkey
• Mubadala to lead $105m in funding for Brazilian fintech Cerc

IHC, the most valuable company on the Abu Dhabi bourse with a market capitalisation of around $167 billion, said it is aiming for publicly-listed companies in growth markets, adding that it was also looking in South America and Indonesia.

Lulo Bank was founded by Jaime Gilinski, a Colombian businessman with over 45 years of banking experience in Latin America, North America and Europe.

Commenting on the acquisition, Syed Basar Shueb, CEO, IHC said: “The fintech ecosystem in Latin America has risen quickly over the past couple of years with sustained growth observed in all segments and in the number of active fintech companies.

“This is especially the case with digital banking which has witnessed the most substantial growth at an average annual rate of 57 percent between 2017 and 2021 to reach 60 percent. 

“In the case of Colombia, it has made significant progress in terms of financial inclusion with the increase in access to financial products, which rose to 87 percent.

“It’s critical for us to align any transaction with our growth strategies, whether to acquire new capabilities or consolidate, and Lulo Colombia sits very well with our expansion plans in Latin America.”

Gilinski added: “Digital banking has come a long way in Colombia. Adoption of new behaviours and new technologies takes time, but it’s already dramatically changed how consumers interact with financial products in our market. 

“We are thrilled to have IHC join our mission of revolutionising the financial landscape in Latin America.”

The Colombian market is the fourth global market which IHC has expanded its investment activities into this year after the United Kingdom, India, and Turkey.

Comprising more than 372 entities and 52,345 employees, IHC straddles sectors from healthcare to real estate to IT and utilities and has made more than 70 acquisitions this year alone.

The company is chaired by Sheikh Tahnoon bin Zayed Al Nahyan, the UAE’s national security adviser and a brother of its president, Sheikh Mohamed bin Zayed. 

Raghu Mandagolathur, CEO of Marmore Mena Intelligence, has compared IHC to US finance giant which employs nearly 378,000 people with $900bn in assets, saying there are parallels around their business models.

Earlier this year, IHC also invested $2bn in Indian multinational conglomerate Adani Group. IHC provided capital to Adani Green Energy, Adani Transmission, and Adani Enterprises, which are all listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) in India – through the preferential allotment route.

IHC’s investment in Adani Group represented 4.87 percent of the total trade between the UAE and India, which reached $41bn between 2020 and 2021.