Dubai’s Mashreq weighs sale of payments business

Mashreqbank is exploring a sale of its payments business in a deal that could value the division at around $500m, according to people familiar with the matter.

The Dubai-based bank is working with Goldman Sachs Group to sound out potential buyers for the unit, which handles the processing of transactions made with credit and debit cards, the people said, asking not to be named because the information is private.

Deliberations are ongoing and no final decision has yet been taken, according to the people. Representatives for Mashreq and Goldman Sachs declined to comment.

Traditional lenders are increasingly putting their payments processors on the block in the face of competition from non-bank practitioners. In Europe, Banco de Sabadell and Italy’s BPER Banca have been exploring deals for similar businesses, Bloomberg previously reported.

The Middle East could be the “next frontier” for mergers and acquisitions in the quickly consolidating industry, according to McKinsey & Co. Private equity groups have meanwhile emerged as major investors in payments businesses by bringing the financial clout and technological prowess necessary to build scale in a market recently upended by the pandemic.

Mashreq’s bigger UAE peers have already capitalised on the interest. First Abu Dhabi Bank is in talks with Brookfield Asset Management to sell its payments unit called Magnati, Bloomberg News reported earlier this week. In 2015, Warburg Pincus and General Atlantic bought a stake in Network International Holdings, a payments provider backed by Emirates NBD Bank, before listing the business in London less than four years later.

Mashreq has been pivoting to digital banking recently in a bid to fend off non-traditional financial services startups. It’s one of the UAE’s oldest banks, with origins dating back to 1967, four years before the country was founded.