Sagard, a Canadian alternative asset management company with
$14.5 billion worth of assets under management, is targeting markets including
the UAE, Egypt, Saudi Arabia and Turkey for new investment, said its chairman
and chief executive.
The company, which is backed by Abu Dhabi’s holding company
ADQ, recently opened its office at Abu Dhabi Global Market to expand into the
region.
“Our initial focus in the region will be very much around
financial services,” Paul Desmarais III told The National in an interview.
“We really view [the] UAE as a hub for the broader region
and we think that Egypt is very interesting ... as well as Turkey and Saudi
Arabia," he said.
“There are a lot of very attractive markets for FinTech in
the region ... Abu Dhabi is the ideal place to base efforts that are going
after those other geographies.”
The company plans to announce its first major investment in
the region in Turkey this year. Mr Desmarais did not disclose the total value
of the deal.
Since the onset of Covid-19, people have turned to online
banking services and other contactless technology to transfer money and pay for
e-commerce transactions, boosting the FinTech sector.
The industry is expected to double in size to about $270
billion in 2027, from more than $135 billion in 2021, in the Middle East,
Africa and South Asia, according to the DIFC FinTech Hive 2022 report.
The revenue of the FinTech industry in the Middle East,
North Africa and Pakistan is set to surge to between $3.5 billion and $4.5
billion by 2025, up from $1.5 billion in 2022, amid strong economic growth and
a robust banking sector.
According to a research report by global consultancy McKinsey in May, the financial services revenue share of the industry could increase from less than 1 per cent to between 2 per cent and 2.5 per cent by 2025. In the Middle East, Africa, Pakistan and Turkey region, FinTech start-ups led in both funding and the number of deals last year, with the sector's funding reaching $2.25 billion across 351 deals in 2022, according to data platform Magnitt. Mr. Desmarais stated that their plan is to become a reliable partner to families and sovereign investors in the region who are interested in their investment vehicles and services. They see the region as a significant area of focus for many of their portfolio companies that serve financial institutions and other sectors, and they believe that there is a meaningful opportunity for many of them to establish themselves in the region. Additionally, they aim to collaborate with existing financial institutions and FinTech firms that provide new access to services to traditionally underbanked or unbanked individuals or those who have not had the same exposure to certain financial opportunities.Sagard possesses a diverse portfolio of 125 companies, which includes prominent entities such as Wealthsimple, an online trading platform, and Dialogue, a health and wellness platform. The establishment of Sagard can be traced back to 2002, when it was initiated by Power Corporation of Canada, a significant investor in Europe and North America. While its origins lie in entrepreneurial families, Sagard has experienced growth with the backing of institutional investors, including Canada's pension plans, family offices, financial institutions, and other corporations committed to supporting talented entrepreneurs, as stated on its website.
According to Mr. Desmarais, Sagard's assets have grown from $400 million in 2016 to $15 billion at present. The company intends to continue its development and aims to become a leader in every sector it focuses on within the next five to ten years. Its objective is to generate superior financial returns while expanding its assets under management (AUM), with a goal of doubling its AUM to $30 billion within the next five years.
In July, ADQ, in collaboration with the Bank of Montreal (BMO), acquired minority equity stakes in Sagard. As part of this transaction, Sagard has also expanded its existing partnership with Great-West Lifeco (GWL), an international financial services holding company, which is increasing its current minority share in Sagard. Under these agreements, BMO, the eighth largest bank in North America in terms of assets, ADQ, and GWL have committed to investing in Sagard to enhance its growth, including through mergers and acquisitions.
Mr. Desmarais highlighted that ADQ has placed trust in Sagard's expertise in various sectors, particularly in financial services, healthcare, and real estate. ADQ also recognizes Sagard's understanding of the European private equity landscape, as well as its entrepreneurial spirit and ability to establish new businesses.
