When Saudi Arabia-based Tabby – one of the Middle East’s first fintech unicorns – announced the acquisition of startup Tweeq, it turned heads among venture capitalists considering ventures. investment opportunities in the kingdom.
The deal, which will see Tabby buy the digital wallet operator for an undisclosed sum, was seen as further evidence that the startup market in Saudi Arabia is maturing and could start to give private equity firms risk more strategies to exit their investments, investors said at the 24th Fintech Conference. in Riyadh last week.
“Successful startup ecosystems are flywheels, and startup exits are a key cog,” said Alexandre Lazarow, global venture capitalist and founder of Fluent Ventures. “They help return capital to investors and catalyze new generations of angel investors.”
“One of the things that is exciting about the Saudi market today is the early but growing number of IPOs and technology M&A, including in the fintech sector,” Lazarow said, highlighting the he importance of a viable route out of investments in Saudi Arabia as that country navigates the early stages of the Saudi market. stages of development of its venture capital market.
Saudi Arabia has become one of the most dynamic markets among emerging venture capital countries in recent years. It trails Singapore in the first half of 2024, with more than $400 million in funds raised, and ranks first in the Middle East and North Africa. Last year, the country overtook the UAE for the first time as the top destination for venture capital investments in the Middle East.
Saudi Arabia’s Rasan Information Technology Co., which operates online insurance platforms such as Tameeni and Treza, was among the first local fintech companies to go public in the kingdom. It raised $224 million in June and has seen its share price rise more than 43% since its stock market debut.
The UAE has historically been the region’s most advanced venture capital market, with investments dating back to 2013 and 2014, according to data firm VC Magnitt. The country accounts for around 45% of all M&A deals concluded in the MENA region since 2019.
But Saudi Arabia is starting to catch up when it comes to M&A in particular; 19% of transactions made last year in the region were in the kingdom, Magnitt said.
“The exit window for business in Saudi Arabia is expected to materialize in the next 2-3 years,” said Philip Bahoshy, CEO of Magnitt. “It takes between 7 and 8 years for a company in the MENA region to achieve exit. »
Saudi startups have received a significant boost thanks to investments from local funds, including STV and Sanabil, a unit of the Saudi sovereign wealth fund, known as the Public Investment Fund. Investing money in technology companies and startups aims to contribute to the goal of creating a venture capital industry and encouraging young entrepreneurs to create businesses that can contribute to the kingdom’s efforts to diversify the economy .
Tabby – a fintech that now offers buy now, pay later solutions – agreed to move its headquarters from the United Arab Emirates to Saudi Arabia last year. It plans to list on the Saudi stock exchange in late 2025 or 2026, the company told local news outlet Argaam last week.
Tabby, who has raised funds from regional and global players such as Wellington Management, Mubadala Investment Capital, PayPal Ventures and Hassana Investment Co., said Tweeq will continue to operate independently once the acquisition of the company is finalized .
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