Naspers, a South African multinational company comprising electronic media and ecommerce businesses, will take a stake of about US$40m in Al Jabbar Internet Group's subsidiary Souq.com, Arabian Business can reveal.
The agreement, according to sources familiar with the deal, is set to be announced in the coming two weeks and will be the largest investment made in an ecommerce and internet business in the Middle East since the 2009 sale of Arabic-language internet venture Maktoob.com, the largest portal in the Arab world. Maktoob was sold for about US$165m to Yahoo!, the second-most popular internet search engine.
In an interview with Arabian Business earlier this month, Jabbar Chairman and CEO Samih Toukan said his group was in talks with investors seeking to take a stake in the company which has eight ventures under its umbrella including Souq.com, the largest ecommerce company in the region.
Naspers has not responded to emails from Arabian Business seeking comment.
"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, who also founded and then sold Maktoob, said at the time. "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."
The value of ecommerce related transactions in the Middle East is about US$11bn a year, according to Jawad Abassi, founder and general manager at Arab Advisors Group. Europe has the largest ecommerce market in the world, growing 19 percent last year with the total value of the market estimated at €246bn, according to figures from the European Multi-channel and Online Trade Association (EMOTA). The North American market is valued at €237bn.
Online retail sales now account for around 5.1 percent of the total value of the retail market in Europe, with 240m e-shoppers spending an average of €1,000 each, according to EMOTA.
"We always raise capital in order to grow the companies," Toukan had said. "We are expanding in new markets, we are doing acquisitions, so we always need capital."
Souq.com competes with Namshi, which was founded less than a year ago and sells shoes and clothing in the Middle East. Namshi secured US$20m in financing from JP Morgan Chase and Blakeney Management last month and is set to expand regionally.
If Souq.com was going to get a capital injection, such an investment would enable the company to invest in its technology, overall operations and expansion, Toukan had said. The company has recorded double digit growth in the last six months in the number of transactions carried out and revenue generated.
"Every month we're growing at double digits from the month before," Toukan had said. "Ecommerce is happening now in the Middle East, it's 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."
By the end of 2011 there were more than 77.7m internet users in the Arab world, a penetration rate of around 22 percent, according to Abassi.
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 ecommerce and start-ups in the region after ventures LivingSocial and Mizado closed down in the last two months.For all the latest GCC 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.
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