Anghami, the music streaming rival of Spotify in the Arab world, is set to become the first technology firm from the region to list on the Nasdaq in New York, following a merger with a blank-cheque company.
The deal with Vitas Media Acquisition Company (VMAC), a special purpose acquisition firm, or SPAC, set up last year will be one of the biggest investments in a technology start-ups this year, valuing the company at $220 million, or about 2.5 times its 2022 estimated revenue.
The company will raise about $100m in funding through the deal and about 70 per cent of proceeds will be reinvested to spur growth, Anghami co-founders Eddy Maroun and Elie Habib told The National on Wednesday.
UAE-based investment bank Shuaa Capital and VMAC parent, Vistas Media Capital, have gathered commitments of a combined $40m in PIPE – private investment in public equity – financing. Shuaa, which has already invested in Anghami in an earlier funding round, has committed $30m and Vistas contributed the remainder.
“We are raising four times more capital than we raised our entire life,” Mr Habib said. “Over the past nine years, we have raised $26m.”
Once the merger deal is completed and Anghami has put its growth plans in place, it will look to cross-list on an exchange in the UAE or Saudi Arabia’s Tadawul, the biggest Arab bourse, Mr Maroun said.
The “Nasdaq is liquid and this raises the profile of the company. But there is nothing that prevents [us] from listing in the region,” Mr Maroun said. “So that hopefully [will be] the next stage” of growth for the company, he added.
Anghami and Nasdaq-listed VMAC, which raised $100m through its listing last year, have signed a definitive merger agreement. The combined company will operate under the Anghami name and the transaction is expected to close in the second quarter of 2021.
SPACs, which are listed companies, are often formed to merge with private ventures, allowing them to become publicly traded entities. The process, which is quicker than an initial public offering, helps to avoid uncertainties associated with a public float. SPACs have become a popular way for venture-backed start-ups to list on the public markets.
Start-ups in the Mena region secured record funding of more than $1 billion last year, despite the coronavirus pandemic, with technology ventures attracting capital, according to data platform Magnitt. Start-ups raised the bulk of funding during the first six months of the year. Private ventures have so far relied on venture capital or strategic investments for financing, but the emergence of SPACs expand their listing and financing options.
Mr Maroun will remain the chief executive of the company and Mr Habib will continue as the chief technology officer. F. Jacob Cherian, chief executive of VMAC, is expected to join the firm as co-chief executive for a period of one year.
The co-founders, will remain the largest shareholders after the transaction, Mr Maroun said, adding that 30 per cent of the SPAC’s cash is expected to be distributed to current shareholders.
Anghami is currently backed by some of Mena region's venture capital firms and strategic shareholders, including media groups and telecommunications companies that collectively own about 68 per cent of the company. The rest is controlled by the founders.
The mix of cash and equity paid to existing Anghami investors depends on the amount of cash in trust net of redemptions, the amount of capital raised in the PIPE and the transaction costs, according to the company.
The enterprise value remains fixed at approximately $220m regardless of the redemptions and PIPE proceeds.
Anghami, which moved its global headquarters and its research and development centre from Lebanon to Abu Dhabi’s tech accelerator Hub71 in January, has offices in Beirut, Dubai, Cairo and Saudi Arabia’s Riyadh.
Founded in 2012 Anghami offers more than 57 million songs to its 70 million registered users with around 1 billion streams per month.
With an Arabic speaking population of more than 450 million globally, a listing on Nasdaq will allow the company to expand its user base, Mr Maroun said.
Most of the funds will go to “growth marketing because we believe the region has a lot of depth and untapped potential”, he said.
“We have plans to grow into [the Arab] diaspora outside the region and this is also a massive market of more than 100 million people that we never invested in.”
The company, he said, is also looking at some emerging markets as part of its next phase of growth and will continue to boost its spending on R&D and technology to build more international partnerships.
Aramex, the Middle East's biggest provider of logistics and transportation solutions, which was founded by Fadi Ghandour in1982, became the first company from the Arab world to list on the Nasdaq in 1997. It later delisted in 2002 and went public again in 2005 on the Dubai Financial Market.
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The winners
Fiction
- ‘Amreekiya’ by Lena Mahmoud
- ‘As Good As True’ by Cheryl Reid
The Evelyn Shakir Non-Fiction Award
- ‘Syrian and Lebanese Patricios in Sao Paulo’ by Oswaldo Truzzi; translated by Ramon J Stern
- ‘The Sound of Listening’ by Philip Metres
The George Ellenbogen Poetry Award
- ‘Footnotes in the Order of Disappearance’ by Fady Joudah
Children/Young Adult
- ‘I’ve Loved You Since Forever’ by Hoda Kotb
Countries recognising Palestine
France, UK, Canada, Australia, Portugal, Belgium, Malta, Luxembourg, San Marino and Andorra
MATCH INFO
Barcelona 4 (Suarez 27', Vidal 32', Dembele 35', Messi 78')
Sevilla 0
Red cards: Ronald Araujo, Ousmane Dembele (Barcelona)
Manchester City 4
Otamendi (52) Sterling (59) Stones (67) Brahim Diaz (81)
Real Madrid 1
Oscar (90)
Wicked: For Good
Director: Jon M Chu
Starring: Ariana Grande, Cynthia Erivo, Jonathan Bailey, Jeff Goldblum, Michelle Yeoh, Ethan Slater
Rating: 4/5
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The specs
Engine: 4.0-litre V8 twin-turbocharged and three electric motors
Power: Combined output 920hp
Torque: 730Nm at 4,000-7,000rpm
Transmission: 8-speed dual-clutch automatic
Fuel consumption: 11.2L/100km
On sale: Now, deliveries expected later in 2025
Price: expected to start at Dh1,432,000
What vitamins do we know are beneficial for living in the UAE
Vitamin D: Highly relevant in the UAE due to limited sun exposure; supports bone health, immunity and mood.
Vitamin B12: Important for nerve health and energy production, especially for vegetarians, vegans and individuals with absorption issues.
Iron: Useful only when deficiency or anaemia is confirmed; helps reduce fatigue and support immunity.
Omega-3 (EPA/DHA): Supports heart health and reduces inflammation, especially for those who consume little fish.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
