Swvl is going public via SPAC at a valuation of $1.5 billion

Dubai-headquartered ride-sharing startup Swvl has announced today that it is going public by merging with a merger with a special purpose acquisition company (SPAC). The deal was first reported by The Wall Street Journal earlier in the day. The mobility company is merging with Queen’s Gambit Growth Capital, a SPAC created earlier this year by a team of female executives (which claims to be the first women-led SPAC). Its CEO Victoria Grace is the founder of New York-based VC fund Colle Capital.

The two companies have entered into a definitive agreement for a business combination that would result in Swvl becoming a publicly listed company on NASDAQ after the completion of the proposed transaction, noted the statement adding that the company will trade under the ticker symbol ‘SWVL’.

Swvl will be the second Middle Eastern company to take the SPAC route to public markets. Abu Dhabi-headquartered music streaming platform Anghami had announced earlier this year that it plans to go public by merging with a SPAC, Vistas Media Acquisition Company. 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. It will be the first Egypt-born technology company to go public on NASDAQ (or outside Egypt) and the second Egyptian technology firm overall to list (Fawry being the first one).

Queen’s Gambit Growth Capital raised $300 million in January when it was formed and another $45 million at a later point through underwriters’ overallotment option, noted the report. The deal with Swvl will also include a PIPE (private investment in a public entity) of $100 million which will be put in by a group of investors including Agility, Luxor Capital, and Zain Group. What this means is that Swvl will have $445 million in fresh capital to invest in its growth and expansion.

Founded in 2017 by Mostafa Kandil, Mahmoud Nouh, and Ahmed Sabbah, Swvl started as a bus-hailing service in Egypt, enabling users to travel within a city by booking seats on buses that run on fixed routes. It later expanded the service in Kenya and Pakistan and moved its headquarters to Dubai. The company today also offers inter-city travel, car-based ride-sharing, corporate services, in different markets. According to the financial information in its SPAC presentation, Swvl made $26 million in annual gross revenue with a negative EBITDA of $29 million (which means the company lost $29 million). It said it aims to grow its annual gross revenue to $1 billion by 2025.

In a statement, commenting on the occasion, Mostafa Kandil, the co-founder and CEO of Swvl, said, “We have succeeded in executing our business plan in some of the most challenging emerging markets, where inefficiencies in infrastructure and related mass-transit systems represent a universal problem, and have now reached a critical inflection point where we are ready to share our expertise and technology with the rest of the world.”

“Queen’s Gambit is an ideal partner, who shares our core values and is committed to helping accelerate Swvl’s long-term growth plans. With their partnership, as a public company, we will expand our daily commuting offerings and enterprise TaaS services that remove barriers to seamless mobility for the populations that need it most. In doing so, we will create even greater value for all stakeholders and continue innovating best-in-class technology solutions that improve the universal, daily struggle of mobility for so many,” he added.

In its primary markets; Egypt, Kenya, and Pakistan, it serves both consumers and businesses through Daily, Travel, and Business offerings whereas, in some of the new markets like Jordan and Saudi, where Swvl has launched recently, it is only serving businesses. Its business offering, known as transportation-as-a-service enables schools, universities, and corporates to design customized transportation options for their students or employees using Swvl’s software and fleet. The company plans to be in 20 countries across 5 continents in the next five years.

The Cairo-born startup has raised over $100 million to date including a funding round earlier this year (that wasn’t announced publicly). Its previous investors include Vostok New Ventures Global, Beco Capital, Raed Ventures, Sawari Ventures, MSA Capital, Silicon Badia, and Oman Technology Fund. It’s last publicly announced funding round was $42 million Series B-2 in 2019 – after which it had quietly raised over $20 million in early 2020 as well.

Mostafa had previously worked at Middle East’s leading ride-hailing company as a market launcher. Swvl’s co-founders Mahmoud Nouh (COO) and Ahmed Sabbah (CTO) left the company in October 2019 and March 2021 respectively to start their own ventures.

Victoria Grace, Queen’s Gambit Founder & Chief Executive Officer, commenting on the merger, said, “When forming Queen’s Gambit, I was squarely focused on assembling a team of highly successful and strategically-minded women with unparalleled global relationships, to identify and then grow a disruptive platform that solves complex challenges and empowers underserved populations. In Swvl, we have found each of those things and more. Having established a leadership position in key emerging markets, we believe Swvl is ready to capitalize on a truly global market opportunity.”

Update – Jul 28, 2021 – 3 PM GMT: The story was updated with more details after Swvl’s confirmation of the SPAC. 

Zubair Naeem Paracha
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