Investment in fintech anticipated to have a soft start in 2024 | Kanebridge News
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Investment in fintech anticipated to have a soft start in 2024

Thu, Feb 29, 2024 6:59pmGrey Clock 3 min

Global fintech investment witnessed a slowdown as investors worldwide chose to preserve their funds. Pulse of Fintech H2’23, KPMG’s bi-annual publication surrounding global fintech investment trends, found that fintech investments dropped from US$196.6b across 7,515 deals in 2022 to US$113.7b across 4,547 deals in 2023. The report highlighted that while 2023 was a challenging year for the fintech market overall, it was a combination of geopolitical events, high interest rates and the parched exit environment that drove the downturn.

Much like global, fintech investment in the Europe, Middle East, and Africa (EMEA) region dropped to a seven-year low of US$24.5b across 1,514 deals in 2023, compared to the US$49.6b across 2,478 deals in 2022. However, the region’s fintech market displayed robust geographic diversity as fintechs from seven different countries represented the top ten deals in the region, with the United Arab Emirates’ Tabby (US$950m) and Haqqex (US$400m) being among the standouts.

Commenting on the outlook for fintech investment in Kuwait, Ankul Aggarwal, Partner and Head of Deal Advisory, KPMG in Kuwait, said, Kuwait’s fintech sector is rapidly catching up with the global markets and witnessing an increase in the industry participants such as digital payments facilitators, insurtech, and P2P platforms, among others.

The Central Bank of Kuwait (CBK) has created an enabling environment for fintech innovation, implementing a range of initiatives, such as updated e-payment regulations and digital banking guidelines. Additionally, CBK is also working towards an open banking framework.

According to the report, H1’24 in the EMEA region will see a growing focus on embedded finance and banking offerings, adoption of the Buy Now Pay Later (BNPL) model, consolidation within the BNPL space, asset tokenization, and artificial intelligence (AI) based solutions around fraud prevention and customer services.

Ankul further added, “In Kuwait, largely, fintech companies are focusing on the unbanked and underbanked segments of the market to carve a niche for themselves and offering related solutions, while traditional banks are moving towards adopting value-added solutions approach focusing on embedded finance and banking offerings.”

On a sectoral level, proptech and ESG proved to be hotbeds for investors with proptech-based investment reaching an all-time high of US$13.4b globally. According to the report, 2023 was the second-best year in terms of ESG fintech investment as it doubled to reach US$2.3b year-over-year (YOY). Given the ongoing regulatory changes and ambitious net zero commitments displayed by governments and businesses, it is likely that ESG-focused fintech solutions will chart an upward trend heading into 2024.

Moreover, investor interest in AI continued to peak in the fintech market as AI-driven fintech companies accounted for US$12.1b in investment in 2023. The report underlines that while this reflects a decline in funding compared to the US$28.1b in 2022, it does not demonstrate falling interest in the space, given many financial organizations and fintechs adopted AI through alliances and product spend instead of doing it through direct investment.

Here are some of the other highlights that emerged from the report:

  • The Americas attracted US$78.3b across 2,136 deals in 2023 — of which the US accounted for US$73.5b across 1,734 deals — while the EMEA region attracted US$24.5b across 1,514 deals, and the ASPAC region attracted US$10.8b across 882 deals.
  • Global M&A deal value dropped from US$98.2b in 2022 to US$56.4b in 2023; global venture capital (VC) investment declined from US$88.8 billion to US$46.3 billion year-over-year. Private equity (PE) growth investment showed the most resilience, up from US$9.6b in 2022 to US$11b in 2023.
  • Payments remained the strongest area of fintech investment globally in 2023, with US$20.7b in investment compared to US$58b in 2022; 2023 investment in other notable sectors included proptech (US$13.4b), insurtech (US$8.1b), crypto and blockchain (US$7.5b), regtech (US$2.6b), ESG fintech (US$2.3b), and cybersecurity (US$1.3b)
  • Corporate-participating VC investment globally fell from US$45.9b in 2022 to US$25.2b in 2023.

The biannual analysis anticipates fintech investment to remain slow heading into the first quarter of 2024, helmed by ongoing global conflicts, surging interest rates, and the continued lack of exits. The expectation is as interest rates stabilize, and potentially decline, AI and B2B (business-to-business) solutions will likely emerge as a top priority for investors. The report predicts that mergers and acquisitions (M&A) activity could also rebound as investors begin to look more closely at distressed assets.



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Preparatory Work for UAE to Oman Hafeet Rail Project Commences at Full Speed

Preparations have begun on the transformative UAE to Oman Hafeet Rail network, revealing significant construction details during a site visit.

Thu, May 16, 2024 3 min

The $3bn Hafeet Rail project between the UAE and Oman will feature 60 bridges and a 2.5km tunnel, making it an “architectural and engineering marvel,” according to CEO Ahmed Al Musawa Al Hashemi.

Hafeet Rail has announced that preparatory work is moving full speed ahead for constructing the transformative railway link between the UAE and Oman. This announcement was made during a site visit attended by key officials, members of the Asyad and Hafeet Rail executive management teams, project contractors, and consultants.

Key Highlights

During the visit, attendees were introduced to the main components of the project, including passenger, repair, and shipping stations, as well as major bridges and tunnel sites.

The Hafeet Rail project is set to play a very important role in enhancing local and regional trade, unlocking new opportunities in the infrastructure, transportation, and logistics sectors, and fostering economic diversification. It will also strengthen bilateral relations between the UAE and Oman.

The project will involve constructing 60 bridges, some reaching heights of up to 34 meters, and tunnels extending 2.5 kilometres. The Hafeet Rail team showcased the latest rail technologies and innovative engineering and architectural solutions designed to navigate the challenging geographical terrain and weather conditions while maintaining high standards of efficiency and safety.

The rail network will boost various industrial sectors and economic activities and significantly impact the tourism industry by facilitating easier and faster travel between the two countries.

Ahmed Al Bulushi, Asyad Group Chief Executive Asset, noted that the project’s rapid progress reflects the commitment of the UAE and Oman to developing and realizing the project’s multifaceted benefits.

Investment and Future Impact

Al Bulushi added that investments in developing local capabilities and expertise in rail-related disciplines over recent years have enabled the project to reach the implementation phase successfully under the leadership of highly efficient and professional national talent.

Hafeet Rail’s CEO Ahmed Al Musawa Al Hashemi emphasized, “The commencement of preparatory works for construction is a testament to the robust synergy between all parties involved in both nations, achieving this milestone in record time. We are confidently laying down the right tracks thanks to the shareholders of Hafeet Rail and the expertise of local companies in Oman and the UAE, alongside international partners.”

During the site visit, the visitors explored some of the key preparatory sites, including Wadi Al Jizi, where a 700-meter-long bridge towering 34 meters will be constructed. This ambitious project is envisioned as an architectural and engineering marvel in a complex geographical landscape.

Future phases will require more collaboration, with a continued focus on quality, safety, and environmental considerations in line with the international industry best practices.

The Hafeet Rail project represents the first-of-its-kind railway network linking two Gulf nations, marking a significant shift in regional goods transportation. This efficient and reliable transportation option will reduce dependence on slower and less sustainable road transport.

Hafeet Rail promises a 40% reduction in shipping costs and a 50% in transit times compared to traditional land transportation methods, as it will be connecting five major ports and several industrial and free zones in both countries.

This shift will reduce reliance on road transport by cars and trucks and promote more sustainable shipping practices. The establishment of the railway network will also create significant opportunities for SMEs in construction, engineering, and logistics support, acting as a catalyst for economic growth and innovation within the domestic economy.

By linking major ports, the Hafeet Rail project will enable local SMEs to import, export, and distribute their products more effectively, enhancing their market reach and global competitiveness.

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