Anghami to list on Nasdaq via SPAC at a valuation of $220 million

Anghami, the leading music streaming platform in the Middle East & North Africa is going public by merging with a special purpose acquisition company (SPAC). A SPAC is also known as a blank-cheque company and is formed to raise money through an IPO with the aim to buy an existing company and take it public.

The SPAC Anghami is merging with is Vistas Media Acquisition Company which is led by F. Jacob Cherian and co-founders Saurabh Gupta and Abhayanand Singh. Vistas had gone public on Nasdaq about six months ago in a $100 million IPO.  Anghami as a result of the deal will become the first Arab technology company to list on Nasdaq (New York) and will trade under the symbol ‘ANGH’.

The transaction is expected to close in the second quarter of 2021 and implies an initial pro-forma enterprise valuation of approximately $220 million, 2.5x 2022 estimated revenues. As the statement by Anghami points out, this compares to Spotify’s current revenue multiple of 6.5x revenue.

Founded in 2012 by Eddy Maroun and Elie Habib in Lebanon, Anghami currently offers over 57 million songs to more than 70 million registered users, recording about 1 billion streams every month. The startup that recently moved its headquarters to Abu Dhabi has offices in Beirut, Dubai, Cairo, and Riyadh. It had raised a little over $25 million from leading investors in the region including Samena Capital, Middle East Venture Partners (MEVP), and MBC Ventures. The investors own 68 percent of the company with the rest owned by Anghami’s founders. About 60 employees of the company also own its stock options.

The deal includes $40 million of combined commitments in a PIPE (private investment in public equity) from UAE’s Shuaa Captial (that had announced it is investing in Anghami earlier this year) and Singapore-based Vistas Media Company, parent of the SPAC sponsor. Anghami expects to have $142 million of cash on its balance sheet at closing that will be used to fuel company’s growth.

Jassim Alseddiqi, Group CEO of SHUAA, said, “We are delighted to be leading the PIPE for Anghami’s business combination with VMAC in what will accelerate Anghami’s growth and build upon its success as a pioneer in the music streaming space in the Middle East and North Africa. SHUAA led a funding round for Anghami earlier in the year and has been working closely with the team to secure the PIPE investment and deliver a successful listing on Nasdaq. In addition, the enhanced reputation and access to capital that comes with a listing on Nasdaq accelerates the company’s growth journey.”

Anghami’s founders will continue to lead the company. F. Jacob Cherian, the CEO of Vistas Media Acquisition Company is expected to join the combined company as Co-CEO for a period of one year.

Elie Habib, the co-founder of Anghami told MENAbytes that they were not thinking about going public a year ago, “We started working on the SPAC in mid-November [in 2020]. It is way better to do a SPAC to raise money if your structure is right. With access to equity markets, we can continue to grow the company on our own terms without having to think about the exit. We had also tried to fundraise over a year ago and realized that the market was not good for fundraising. We then changed our priorities to focus on growth using our internal cash flow.”

He also said that they plan to use the money they will raise by going public to fuel company’s growth including investments in content, “We believe there’s lack of content in the region. For context: 1 percent of Anghami’s content generates 50 percent of our traffic. We need to invest in Arabic content. We need to invest in Arabic artists.”

The Abu Dhabi-headquartered startup aims to increase its penetration in existing markets and launch its products in other similar emerging markets.

Anghami had introduced music streaming in the Middle East in 2012 but has been facing competition from international rivals like Spotify and Deezer for the last three years after their expansion to the region.

Our IPO should serve as a message of hope for people and entrepreneurs in the region, stated Elie, speaking to MENAbytes, “Let’s work together. If we give away our culture, our music to foreign companies, we will be left with nothing in the end.”

Eddy Maroun, the co-founder and CEO of Anghami, said, “Today is a very exciting day for all of us at Anghami and our partners globally. Elie and I co-founded the company in 2012 with a vision for Anghami to be a first of its kind, digital media entertainment technology platform in the MENA region. Today, we have taken a significant step forward in our growth plans in seeking to become the region’s first Arab technology company to list on Nasdaq. Being a U.S. listed public company gives us access to growth capital and a global platform that is the best in the world.”

SPACs have become a very popular tool for companies in the last eighteen months to go public. Elie hopes that their listing on Nasdaq will inspire other Middle Eastern startups to take similar steps but he also warns that SPACs are not for every company, “The structure and governance have to be right. You have to be ready to do it. Anghami has been profitable throughout 2020 which was a very difficult year so we’re very optimistic about the future.”

In a statement, the music streaming company said that its revenues have grown 80 percent over the last three years and are expected to increase five-fold over the next three years.

Rabih Khoury, Managing Partner of Middle East Venture Partners (MEVP), commenting on the deal, said, “As the largest institutional investor in Anghami, we at MEVP are delighted that one more of our top portfolio companies will list on Nasdaq, the leading global market for technology. We have partnered with Eddy and Elie from the outset in 2012 and continuously supported Anghami starting with its seed round and all its subsequent funding rounds.”