Understanding regional variations in consumer demand for loan solutions is essential for fintechs to thrive. Customers frequently have a favorable opinion of buy now, pay later (BNPL) choices in developed countries where credit cards are widely used due to their flexible installment plans.
However, BNPL has an even stronger use case in developing regions like the Middle East, where spending power is great but credit card adoption is low. As a result of the model’s rapid growth, Tabby, one of the pioneers in the region, raised $160 million in a Series E round at a $3.3 billion value, making it the most valuable fintech in MENA.
The transaction was co-led by investment management company Hassana Investment Company and growth equity investor Blue Pool Capital. Wellington Management and STV, a Saudi-based investor, also took part.
Less than 18 months have passed since Tabby raised $200 million in a Series D round at a valuation of $1.5 billion. The business claims that since then, Tabby, which claims to be profitable, has doubled its valuation and annualized transaction volume, reaching over $10 billion.
Hosam Arab, the CEO and co-founder of Tabby, tells TechCrunch, “The profitability of the business has grown significantly as our volumes have doubled.” He ascribes this expansion to the introduction of new goods, which have increased the frequency of use. “In the past, customers only trusted us with their [point-of-sale] or e-commerce purchases. He continues, “They now view Tabby as a tool to manage all of their spending, whether it’s purchasing a cup of coffee or taking an Uber ride, especially in the UAE.”
Move into broader financial services
Tabby first concentrated on online transactions before branching out into in-store payments and subsequently further into financial services and retail. Users can now spend anyway they like with its Tabby Card, and Tabby Plus has a rewards scheme that is subscription-based. In the meanwhile, Tabby Shop helps customers get better deals by offering longer-term payment options.
The fintech company with its headquarters in Riyadh claims that growing its product range has helped it reach 15 million users in Saudi Arabia, the United Arab Emirates, and Kuwait, a 50% growth since October 2023. The company currently supports over 40,000 brands and merchants, including Amazon, Adidas, IKEA, Samsung, and Noon.
Credit is not the end of Tabby’s journey. As part of its strategy to diversify into more financial services, including as digital accounts, payments, and money management tools, which complement the nation’s drive toward a cashless economy, it purchased Tweeq, a Saudi-based supplier of digital wallets, last year.
Remittances are another area on Tabby’s roadmap where it already has a strong presence. Given that the UAE and Saudi Arabia are two of the biggest remittance markets in the world, Tabby’s clientele, which is primarily made up of foreigners, offers a clear opportunity.
One of the busiest remittance corridors in the world, the UAE-India corridor, may be Tabby’s first target, though Arab is unwilling to provide specifics. He acknowledges that in order for Tabby to provide remittance services, flexibility will be essential. The fintech intends to provide customers the option to divide remittances over time, something that few of its rivals do.
Brewing competition and IPO plans
In the BNPL market, Abby faces off against Tamara, who is backed by Coatue, on a regional level. Global firms like Revolut, a neobank located in the United Kingdom that declared aspirations to enter the $44 billion UAE market last September, will present it with new competition in the remittance space.
However, Arab is certain that Tabby’s size, local market knowledge, reputable brand, and strong client relationships—which have made it one of the biggest financial services platforms in the region with a sizable user base and a wide-ranging merchant network—will be advantageous.
Regarding the initial public offering (IPO), this Series E financing may be Tabby’s final private offering before to going public on the Saudi Exchange. During its Series D, that was also intended to be the case, but market conditions might have caused those plans to be postponed.
Arab claims, “We’re opportunistic with funding rounds.” We chose to raise now because it was the right conversation with the right partner at the right moment. However, our intentions for an IPO have not changed. We’re really serious about it, and we probably won’t raise another private round until there is a major change in the markets.
In MENA, investor interest in tech IPOs is growing. The region’s desire for high-growth businesses was demonstrated by Talabat’s significant IPO in Dubai last year. In the meanwhile, BNPL companies may use Klarna’s anticipated April IPO as a predictor of the industry’s future. (Amazon has already declared its intention to acquire Indian player Axio.)
But for the time being, Tabby, which has raised more than $1 billion in debt and equity, is concentrating on growing its financial ecosystem. When the time is right, it hopes to become the next significant tech listing in the area. According to Bloomberg, the fintech has engaged three banks to work on the deal after relocating its headquarters from Dubai to Riyadh for this reason.