The demand for credit options among consumers differs by region, making it essential for fintech companies to recognize these variations for their longevity. In mature markets where credit cards are prevalent, consumers generally view buy now, pay later (BNPL) services favorably due to their versatile repayment plans.
Conversely, in developing regions such as the Middle East, where credit card usage is limited but disposable income is significant, BNPL presents a compelling proposition. The concept has gained such momentum that Tabby, a leader in the sector, has emerged as the most valuable fintech in MENA after raising $160 million in a Series E financing round, achieving a valuation of $3.3 billion.
The funding was co-led by growth equity investor Blue Pool Capital along with investment management firm Hassana Investment Company. Additional participation came from Saudi-based STV and Wellington Management.
This latest funding round comes less than a year and a half after Tabby’s $200 million Series D, which valued the company at $1.5 billion. Since then, the company claims it has doubled both its valuation and annual transaction volume, which has now crossed the $10 billion mark.
“With our transaction volumes having doubled, our profitability has improved enormously,” said Tabby’s founder and CEO Hosam Arab in an interview with TechCrunch. He credits this success to the introduction of new products that have led to increased usage frequency. “Customers initially relied on us primarily for e-commerce or [point-of-sale] transactions. Now, particularly in the UAE, they consider Tabby as a comprehensive solution for managing all their expenses, whether it’s purchasing a coffee or scheduling an Uber ride,” he noted.
Expansion into Broader Financial Services
While Tabby initially focused on online payments, it has gradually branched into in-store transactions and deeper retail and financial services. Its innovative Tabby Card allows users to spend more flexibly, while the Tabby Plus subscription provides a rewards program. Additionally, Tabby Shop facilitates extended payment options to help users snag better deals.
Headquartered in Riyadh, Tabby currently partners with over 40,000 brands and merchants—including major names like Amazon, Adidas, IKEA, Samsung, and Noon. This expansion of its offerings has propelled its user base to 15 million across Saudi Arabia, the UAE, and Kuwait, marking a 50% growth since October 2023.
Tabby is not limiting itself to credit solutions. Last year, it acquired Tweeq, a digital wallet service based in Saudi Arabia, as part of its strategy to broaden its financial services to include digital accounts, payment processing, and financial management tools. These initiatives align with the nation’s objectives toward a cashless economy.
Looking ahead, Tabby is aiming to enter the remittance space, a sector where it already holds a robust position. Given that Saudi Arabia and the UAE are among the world’s leading remittance markets and that Tabby’s clientele largely consists of expatriates, this area presents a natural growth opportunity.
Though Arab refrains from disclosing specific details, the fintech may initially target the UAE-India remittance corridor, recognized as one of the busiest globally. He emphasizes that flexibility will be fundamental to Tabby’s remittance offerings. Unlike traditional remittance companies, Tabby intends to permit users to divide their remittance amounts over time—an option rarely available from competitors.
Emerging Competition and IPO Aspirations
Regionally, Tabby faces competition from Tamara, a BNPL player backed by General Catalyst. In the remittance sector, it will encounter new rivals, including global entities like Revolut, the UK-based neobank that recently revealed intentions to enter the UAE’s substantial $44 billion market.
Despite these challenges, Arab remains optimistic that Tabby’s scale, local market insights, well-established brand, and deep-rooted customer relationships position it as one of the region’s leading financial services platforms.
As for its IPO plans, this Series E round may mark Tabby’s final private fundraising effort before entering the public market on the Saudi Exchange. This scenario also arose during their Series D funding round, although changing market conditions may have pushed those ambitions back.
“We take an opportunistic approach to funding rounds,” Arab stated. “We believed this was the appropriate conversation with the right partner at the perfect moment, prompting us to raise funds at this time. Nonetheless, our intention to pursue an IPO remains intact, and unless there’s a significant market shift, we are unlikely to seek additional private funding.”
The demand for tech IPOs in MENA is on the rise. Talabat’s giant listing in Dubai last year reflected the region’s enthusiasm for rapidly growing startups. Concurrently, Klarna’s anticipated IPO in April may serve as a bellwether for the BNPL sector, hinting at potential future trends. (Notably, Amazon recently expressed plans to acquire Indian player Axio.)
For now, Tabby, which has garnered over $1 billion in funding through equity and debt, is concentrating on scaling its financial ecosystem, aiming to become the next notable tech listing in the region at the appropriate moment. According to Bloomberg, the firm, which recently relocated its headquarters from Dubai to Riyadh for this purpose, has enlisted three banks to facilitate its IPO process.
Compiled by Techarena.au.
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