Wamda Capital's Fadi Ghandour said a listing would have been a statement about the eco-system in the region
The Middle East’s largest online shopping website Souq.com, which relaunched yesterday to become part of the Amazon e-commerce portal, could have opted to go public on the stock exchange, according to the executive chairman of Wamda Capital, Fadi Ghandour.
Souq.com was bought by Amazon in 2017 for just under $600 million. Its founder Ronaldo Mouchawar, now vice president of Amazon MENA, announced yesterday the end of the 13-year-old brand, with website visitors redirected to a new Amazon portal across the region, except in Saudi Arabia and Egypt where it is not yet ready to relaunch.
Ghandour said that while the name change was “inevitable” due to Amazon’s solid global branding, Souq.com could have opted for an initial public offering (IPO) instead of selling to the US giant and rebranding.
“I think this was inevitable, the Amazon brand is very powerful globally, and the brand integration was predictable. This is a new global company operating in the region now. I think the bigger question might have been, should Souq have gone public like Jumia just did very successfully on the New York Stock Exchange?” he said.
“That would have been the statement about the eco-system in the region. But companies have choices and that is what Souq’s shareholders decided then, we cannot second guess now,” he added.
Jumia, which is dubbed the Amazon of Africa, became the first start-up from the region to list on a major global exchange, the New York Stock Exchange, in a historic initial public offering, where its stock, which was priced at $14.5, closed up 75%.
In March this year, another Dubai start-up, ride-hailing company Careem, confirmed it will be acquired by rival Uber, which is expected to debut on the New York Stock Exchange on May 10.
The $3.1 billion acquisition planned for Q1 of 2020 will see Careem become a wholly-owned subsidiary of Uber, but its founders Mudassir Sheikha and Magnus Olsson claim it will continue operating as an independent company under the Careem brand.
In a comment piece addressing the acquisition, Elie Khouri, CEO of Omnicom Media Group MENA, said in April that the two companies will “most certainly seek synergies and combine resources, potentially ending up with a single brand. The pressure to do so will be heightened when Uber needs to deliver greater results post-IPO.”
Uber will acquire all of Careem’s mobility, delivery, and payments businesses across the Middle East including in Morocco, Pakistan, Egypt, Jordan, Pakistan, Saudi Arabia and the UAE.
Khouri argued that investors should have offered more funding to Careem “instead of letting our regional champion fall into foreign hands.”
“We should have worked towards Careem acquiring Uber’s regional business, like Didi in China. Surely, we have wealthy entities and ambitious individuals ready to make such a move. This would have proven that not only the Middle East can create and build strong local tech brands, but it can also own them for the long term and take them into the future. Who knows, maybe Careem could have become a global giant grown from Middle Eastern roots,” he said.