Middle Eastern online retailer Souq.com has raised $275 million from a funding round with investors to support its future growth, it said on Monday, in the largest-ever fundraising in the region’s e-commerce space.
The Middle East’s technology sector, including e-commerce, is growing rapidly due to the region’s young and tech-savvy population. Kuwait, Saudi Arabia and the United Arab Emirates are in the top seven worldwide for mobile phone penetration.
Souq.com, which sells consumer electronics, fashion and household goods among others, said investors participating in the funding round included Tiger Global Management, Naspers, Standard Chartered Private Equity, International Finance Corporation and Baillie Gifford.
Chief Executive Ronaldo Mouchawar would not be drawn on the make-up of the current shareholder base. However, he said no shareholder had a majority in the company and Naspers and Tiger Global Management had also invested in previous funding rounds.
In a separate statement, Standard Chartered Private Equity said it had invested $50 million in Souq.com for a minority stake. It did not specify the stake size.
Having used cash from previous fundraisings to build up its infrastructure, Mouchawar told Reuters the new money would support the growth of its product offering, development on mobiles, as well as logistics, including its last-mile delivery and payment services.
The slow development of online payment services in the region has a major drags on the region’s e-commerce sector, with the majority of online purchases still cash on delivery.
Souq.com mostly serves customers in Saudi Arabia, UAE and Egypt but last year began delivering to customers in Oman, Qatar and Bahrain. Looking at ways to service Kuwait from its Dubai hub would be part of its future plans, according to Mouchawar.
“The region has many countries, one language, one culture, but you need to get your logistics in order to make sure you serve the whole region and not just one area.”
The Middle East e-commerce market was expected to be worth $20 billion in 2016, the company said.
The company had made small acquisitions and would continue to seek out further opportunities, Mouchawar said, adding a stock market listing was not an immediate plan as it focuses on growing the business.
(Editing by Stephen Coates and Susan Thomas)