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Travelex buy puts Shetty in a new league

|By K Raveendran|B R Shetty

It is indeed a milestone in the history of UAE’s expatriate business. The purchase of a controlling stake in Travelex by Dr B R Shetty is easily the biggest acquisition by an expatriate both in terms of its value and profile. It is also perhaps the biggest global brand acquired by a UAE-based Indian entrepreneur.

There have been buyouts of higher values, but these have mostly involved sovereign wealth funds and national investment groups or even entities owned by state or its top functionaries.  Similarly, overseas Indians based in other parts of the world have entered into bigger deals. But there are few parallels for something on this scale by an Indian expatriate based in the UAE.

The details of the commercial terms of the deal have not been disclosed as these have been kept confidential. But unofficial estimates put the value of the deal to be worth at least AED 3 billion. The previous owner had acquired a majority stake in Travelex in 2005 for over AED 6 billion, although in 2011 the company disposed off some assets to concentrate more on its core activity of foreign exchange transactions.

For a man who first came to the UAE to earn money and remit it back home to settle a debt, it is perhaps the ultimate dream-come-true for Dr Shetty that the business he founded is already responsible for nearly half of all money remittances to India by workers in the GCC.  Out of  an estimated $415 billion remittance flows into the developing world, the UAE Exchange claims 6 per cent market share, which amounts to $25 billion or more.

There cannot be more compelling reasons for Dr Shetty to add Travelex to his kitty or for the owners of the global brand to hand it over to the UAE businessman, who has virtually founded a business empire around foreign exchange.  There are enormous complementarities, which are seen to benefit both.

Travelex is the world’s leading independent retail foreign exchange business. Over the past 38 years, it has built the world’s largest retail network of specialist foreign exchange outlets and developed into a widely recognised brand in foreign exchange. With operations across the breadth of the foreign exchange value chain, it has a globally diversified geographic footprint, including about 1,500 outlets and over 1,300 ATMs in 27 countries.

Dr Shetty, who effected the acquisition through his BRS Ventures & Holdings Ltd, has ruled out any merger and announced that the two companies would exist and operate independently of each other. Each has its respective areas of strength, which he is keen to protect and develop further.

Administratively, Travelex will continue to be led by its founder chairman Lloyd Dorfman, who will now become president, while Peter Jackson, CEO, will stay on in the same capacity along with his top management team. The leading forex brand says it will stay wedded to its strategy of increasing market penetration through expansion of distribution channels and product range, new country entries and the further development of its payments business as well as building on scale advantages.

The UAE Exchange similarly has a fast-growing international presence and spans 32 countries with over 700 offices.  In the UAE, which accounts for its biggest presence, the company has over 130 branches offering diverse remittance channels including bank and instant money transfers, foreign currency exchange, payroll solution, prepaid travel card and bill payments. Travelex’s strong culture of compliance and risk management, underpinning its relationships with regulators and wholesale and retail partners, could come handy for the UAE Exchange to raise its own profile in these areas.

With the two major players under his belt, Shetty would become the uncrowned king of foreign exchange with sway over a large part of the world. He already has an impressive portfolio, consisting of hospitality business, food and beverages sector, healthcare industry and pharmaceutical manufacturing. A banking licence in India, which is being pursued vigorously, will make it even more formidable.