(Corrects first paragraph to remove phrase saying UAE Exchange
Group is the owner of Travelex)
By Tom Arnold
DUBAI May 18 UAE Exchange Group, a global
remittance and foreign exchange business, aims to spend between
$250 million and $300 million on acquisitions to build its
global market share, its chief executive said.
The group aims to increase its share of the $575 billion
global remittance industry to more than 10 percent by 2020, from
6.75 percent currently, Promoth Manghat said.
"The group is exploring multiple bolt-on acquisition
opportunities as well as strategic investments in remittances
and payments space with a specific focus on fintech (and)
digital," Manghat said.
Exchange houses and other traditional payment processors
such as banks are facing a challenge from fintech companies,
which can increasingly transfer payments at more competitive
UAE Exchange's majority shareholders bought Travelex in
January 2015 for 800 million pounds ($1.1 billion).
Manghat said UAE Exchange was working with unidentified
boutique firms and banks to advise it on two to three potential
acquisitions in 2017.
Global remittances to developing countries fell for a second
year in a row in 2016 to $429 billion, a trend not seen in three
decades, according to World Bank data, due in part to low oil
prices and weak economic growth in the Gulf and Russia taking a
toll on remittances to Asia.
UAE Exchange saw around 8 percent growth in outflows from
the United Arab Emirates in the first quarter of 2017, and full
year growth is likely to be stronger than in 2016, said Manghat.
Growth was driven by its largest markets - India, Pakistan,
Bangladesh and Philippines, he said.
In addition to tepid economic growth, the region's exchange
houses have been battling against moves by some banks to close
their accounts, usually citing compliance concerns.
"De-risking continues to be a challenge for the industry,"
Manghat said. "Banks are an important link in the chain and we
can't cash money or intermediate payments without them."
Mounting compliance and administration costs prompted major
UAE exchange houses to raise fees for remitting money last
UAE Exchange raised its pricing in the range of 5 to 7
percent, said Manghat, adding that industry remittance costs for
the UAE were still lower than the global average.
(Editing by Susan Fenton)