By Massoud A. Derhally
CEO Samih Toukan sold Arabic-language venture Maktoob.com for $165m in 2009
Al Jabbar Internet is in talks with investors seeking to take a stake in the group, Arabian Business can reveal.
The group – which includes souq.com, the largest e-commerce company in the region, may also sell partial stakes in some of the eight companies under its umbrella, Chairman and CEO Samih Toukan said.
"We are talking to different investors and we have interest in Jabbar, in souq, in other companies of Jabbar, some investors want to buy some want to invest," Toukan said in an interview with Arabian Business. "The interest is there and we're excited about it. Some of it is from [companies in] the region some of it is from outside the region and is international."
Toukan set up Jabbar after selling in 2009 Arabic-language internet venture Maktoob.com, the largest portal in the Arab world, for about US$165m to Yahoo!, the second-most popular internet search engine.
"Jabbar has raised a capital of $60 million so definitely we'll be talking millions of dollars," Toukan said when asked for what the size of investment or acquisitions might look like. "We always raise capital in order to grow the companies. We are expanding in new markets we are doing acquisitions so we always need capital. At the same we have interested investors that come and say we're interested either to expand in you and invest or to acquire one of your assets."
Though Toukan declined to specify details on the talks being conducted because of non-disclosure agreements, souq, which was founded in 2005 and operates across the Middle East, could sell for as much as $40 million, according to sources who spoke on condition of anonymity.
Buyers may include Naspers, a South Africa-based multinational company with comprising electronic media and ecommerce businesses. Naspers did not respond to emails from Arabian Business seeking comment.
Souq competes with Namshi, which sells shoes and clothing in the Middle East - and secured $20 million in financing from JP Morgan Chase and Blakeney Management last week. The company was founded less than a year ago and is now set for major regional expansion.
If souq was going to get a capital injection, an investment that would enable the company to invest in its technology, overall operations and expansion, Toukan said.
The company has recorded double digit growth in the last 6 months in the number of transactions carried out and revenue generated.
"Every month we're growing at double digits from the month before," Toukan said. "Dubai is big. Saudi is growing, things are moving in Egypt, Kuwait is interesting. Souq is a huge growth story in the region and I think will be one of the biggest internet companies in the area. Souq is big but it's the beginning of e-commerce in the region,'' he said.
Jabbar's other companies include sukar.com, cobone.com, run2sport.com, cashu.com, ikoo.com, tahadi.com and nibras.com.
An investment or acquisition in Jabbar or its subsidiaries would be a further boon for e-commerce and start-ups in the region after two ventures LivingSocial and Mizado closed down in the last two months.
The investment in Namshi is "very good news to the industry it shows that international players are willing to invest and it helps although Namshi is a competitor of ours," Toukan said. "E-commerce is happening now in the Middle East, its being conquered, a lot of investment is being put into it. It's happening, investors see the opportunity and it's the beginning of it."
The value of e-commerce related transactions is about $11bn a year in the Middle East, according to Jawad Abassi, founder and general manager Arab Advisors Group. Europe has the largest e-commerce market in the world, growing 19 percent last year with the total value of the market estimated at 246bn euros, according to figures from the European Multi-channel and Online Trade Association (EMOTA). The North American market is valued at 237bn euros.
Online retail sales now account for around 5.1 percent of the total value of the retail market in Europe, with 240 million e-shoppers spending an average of 1,000 euros each, according to EMOTA.
"People are investing because they're waking up to the fact that this is almost a virgin market and as the broadband penetration rate is increasing people are using the internet for value added services," Abassi said.
By end of 2011 there were more than 77.7 million Internet users in the Arab World with an Internet user penetration of around 22 percent, Abassi says.For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.