Swvl Inc, a Dubai-based provider of mass transit and shared mobility solutions that was born as an Egyptian bus-hailing venture, is going public via a merger with Queen’s Gambit Growth Capital, the first special purpose acquisition company (SPAC) led by women.
The two firms have inked an agreement for a merger that would result in Swvl becoming a publicly listed company on the Nasdaq. It is pipped to be the most valued Africa-related company on debut in the US. In 2019, ecommerce major Jumia had listed on the NYSE with a market valuation of $1.2 billion. Swvl is likely to debut with a valuation of $1.5 billion.
Agility, a global supply chain firm operating in many of Swvl’s key markets, has made a significant capital commitment in Queen’s Gambit and the combined company. Zain, a mobile voice and data services operator with nearly 50 million active customers across many of Swvl’s current markets, has also invested in the combined company.
The overall transaction is likely to generate gross proceeds of up to $445 million, which will be used to fund and accelerate Swvl’s growth plan. This includes a $100 million fully committed private placement of common shares of the combined company, led by Agility, Luxor and Zain. Existing Swvl shareholders are likely to own 65% of the combined company.
Swvl will join Anghami, a music streaming venture from the region that decided to list via a SPAC floated by Indian filmmakers. It is also the second unicorn from Egypt after fintech major Fawry achieved the milestone last year.
Swvl was co-founded by chief executive Mostafa Kandil, Mahmoud Nouh and Ahmed Sabbah in 2017. Nouh and Sabah have moved on from the company. It relocated its headquarters to Dubai in 2020, after it raised $175 million.
Apart from Egypt and the UAE, Swvl now operates in 10 cities across Pakistan, Saudi Arabia, Kenya, Nigeria and Jordan. Swvl’s gross revenue and markets have grown rapidly, with more than 1.4 million riders booking over 46 million rides to date.
Besides the core bus-hailing platform, it also offers transportation as a service (TaaS) for institutional movement of passengers like schools and offices. With its TaaS offerings, Swvl has over 100 organizations in its network.
Kandil, who was just 24 when he co-founded the venture, said: “We have succeeded in executing our business plan in some of the most challenging emerging markets, where inefficiencies in infrastructure and related mass transit systems represent a universal problem, and have now reached a critical inflection point where we are ready to share our expertise and technology with the rest of the world.”
Kandil began his career at Rocket Internet, where he launched the car sales platform Carmudi in the Philippines. He then served as Rocket Internet’s head of operations. In 2016, he joined Careem, a ride-sharing company and the first unicorn in the Middle East. He supported the platform’s expansion into multiple new markets. Careem is now a subsidiary of Uber, based in Dubai, with operations across 100 cities and 15 countries.
Kandil will continue as CEO of the combined company. Victoria Grace, who heads Queen’s Gambit Growth Capital, will be on the board of the combined firm.
Swvl has forecasted gross revenue of $79 million for the year through December 2021, compared with 2020 gross revenue of about $26 million. The firm has projected its gross revenue would grow to $141 million in 2022 and $403 million in 2023. It expects to achieve 15% EBITDA margin over the longer term.
The company aims to achieve $1 billion in annual gross revenue with operations in 20 countries on five continents (Africa, South America, North America, Europe and Asia) by 2025.
Barclays is serving as the M&A and capital markets financial advisor to Swvl and as a placement agent to Queen’s Gambit in connection with the PIPE investment. Guggenheim Securities is serving as the M&A advisor to Queen’s Gambit in connection with the transaction, and also as a placement agent in connection with the PIPE investment.
Cravath, Swaine & Moore LLP, Slaughter and May and Maples are serving as legal advisors to Swvl. Vinson & Elkins L.L.P. and Walkers are serving as legal advisors to Queen’s Gambit.