Tabby Valuation Doubles to $3.3B in $160M Funding Round

Regional Variations in Credit Demand and the Rise of BNPL

The appetite for credit solutions differs significantly depending on geographic location. For fintech companies, recognizing these nuances is crucial for sustained success.

In more developed economies, where credit cards are widely utilized, consumers generally respond favorably to buy now, pay later (BNPL) services due to the convenience of their installment plans.

BNPL's Strong Performance in Emerging Markets

However, in developing regions such as the Middle East, where credit card usage remains limited despite substantial purchasing capabilities, BNPL presents an even more compelling value proposition.

This model is experiencing considerable growth, exemplified by Tabby, a leading innovator in the region. The company has achieved the status of the most highly valued fintech in the MENA region.

Tabby's Recent Funding and Valuation

Tabby recently secured $160 million in a Series E funding round, resulting in a valuation of $3.3 billion.

This financing was jointly led by growth equity investor Blue Pool Capital and investment management firm Hassana Investment Company.

Additional participation in the round came from Saudi-based investor STV and Wellington Management.

Rapid Growth and Profitability

This funding round follows a $200 million Series D raise just 18 months prior, at which time Tabby’s valuation stood at $1.5 billion.

Since then, the company, which reports being profitable, has seen its valuation double and its annualized transaction volume surpass $10 billion.

Expanding Product Offerings Drive Growth

“The profitability of our business has increased substantially as our transaction volumes have doubled,” explains Hosam Arab, co-founder and CEO of Tabby, in an interview with TechCrunch.

He credits this expansion to the introduction of new products, which have led to increased frequency of use.

“Previously, customers primarily used Tabby for e-commerce or point-of-sale purchases. Now, particularly in the UAE, they view Tabby as a comprehensive spending management tool, applicable to everyday transactions like coffee or ride-sharing services,” Arab adds.

Expansion into Comprehensive Financial Solutions

Initially concentrating on digital transactions, Tabby subsequently broadened its scope to encompass in-store payments and then ventured further into the retail and financial sectors. The introduction of the Tabby Card provides customers with adaptable spending capabilities, complemented by Tabby Plus, a subscription service delivering rewards benefits.

Additionally, Tabby Shop facilitates access to more advantageous offers through extended payment schedules. The fintech, headquartered in Riyadh, currently partners with over 40,000 brands and retailers.

These include prominent names such as Amazon, Adidas, IKEA, Samsung, and Noon. This product diversification has been instrumental in expanding Tabby’s user base to 15 million customers throughout Saudi Arabia, the UAE, and Kuwait.

This represents a 50% growth since October 2023. Tabby’s ambitions extend beyond conventional credit offerings. The acquisition of Tweeq, a digital wallet provider based in Saudi Arabia, last year signaled its intention to move into a wider array of financial services.

These include digital accounts, payment solutions, and tools for managing finances. Such offerings are in line with Saudi Arabia’s national strategy to promote a cashless economy. Remittances represent another key area of focus for Tabby’s future development.

The company already possesses a strong foothold in this market. Given that Saudi Arabia and the UAE are significant players in the global remittance landscape, Tabby’s substantial expatriate customer base provides a considerable advantage.

Tabby is initially considering targeting the UAE-India remittance corridor, a particularly high-volume route. A key differentiator in Tabby’s remittance services will be flexibility. Unlike conventional remittance services, the fintech intends to enable users to distribute remittances over a period of time.

This is a feature currently offered by very few competitors. This approach allows for greater financial control and planning for users sending money abroad.

Tabby's Competitive Landscape and Potential IPO

Tabby is currently engaged in regional competition with Tamara, a company supported by Coatue, within the Buy Now, Pay Later (BNPL) sector. Expansion into remittances will introduce new challenges, as Tabby will encounter established international entities like Revolut, a U.K.-based neobank that declared its intention to enter the UAE’s $44 billion market in September of the previous year.

Despite this increased competition, Arab expresses assurance in Tabby’s ability to succeed. This confidence stems from the company’s substantial scale, in-depth understanding of the local market, a well-regarded brand, and strong connections with its customer base.

IPO Considerations

This Series E funding round could represent Tabby’s final private capital raise prior to a potential public offering on the Saudi Exchange. Initial expectations pointed towards an IPO following the Series D round, however, prevailing market conditions may have necessitated a postponement of those plans.

Arab explains that Tabby adopts a strategic approach to funding. “The timing and partner were ideal for this raise, prompting our decision to proceed,” he states. “Our commitment to an IPO remains firm, and barring substantial market fluctuations, we do not anticipate seeking further private investment.”

Growing Interest in Tech IPOs

Demand for technology IPOs within the Middle East and North Africa (MENA) region is demonstrably increasing. The successful listing of Talabat in Dubai last year highlighted the region’s strong interest in rapidly expanding startups.

Furthermore, Klarna’s anticipated IPO in April is expected to provide valuable insights for BNPL companies, potentially indicating future trends within the sector. Amazon’s recent announcement of its intention to acquire Indian firm Axio further illustrates the evolving dynamics of the market.

Currently, Tabby, having secured over $1 billion in both equity and debt financing, is prioritizing the expansion of its financial ecosystem. The company intends to pursue a major tech listing in the region when conditions are favorable. According to Bloomberg, Tabby, which relocated its headquarters from Dubai to Riyadh specifically for this purpose, has engaged three banks to facilitate the IPO process.

• Tabby faces competition from Tamara and Revolut.
• The company is confident in its market position due to its scale and local expertise.
• An IPO on the Saudi Exchange remains a key objective.