In a move to tackle the advent of Amazon in the Middle East with the $650 million acquisition of Souq, its competitor Emaar Malls has today announced that it has acquired a majority 51 percent stake in Rocket Internet-backed Namshi, its Middle Eastern Amazon clone, for a massive $151 million.
This development from Emaar comes only when it was unable to pry Souq away from the grips of the American e-commerce giant, even when its bid for the company was higher than that of Amazon. It now also provides the property giant, who’s been looking to enter the online marketplace landscape, a foothold against the entry of one the largest e-commerce giants in the Middle Eastern region. Rocket Internet’s official blog post reads as under:
This partnership will accelerate Namshi’s development in the region and allow it to continue to flourish as the region’s pre-eminent fashion e-commerce destination.
Fashion e-tailer Namshi will serve as Emaar Malls’ ramp towards the web-focused economy, drawing some of its focus away from the brick-and-mortar properties such as the Dubai Mall and Burj Khalifa. GFG’s finance chief Nils Chrestin acknowledged the said fact and stated in a statement, via Reuters, that it was a clear sign of Emaar’s ambition to enter the digital space. And now, with the backing on billionaire Mohamed Alabbar, founder and chairman of Emaar Properties, the fashion e-tailer will be able to tap larger opportunities and expand to newer geographies.
Commenting on this fresh opportunity, Namshi’s co-founders in an official statement said:
We are proud to call Dubai home, and it is with deep gratitude and humility that we enter into this partnership with Emaar, a pioneer in bringing world-class excellence to the region and making Dubai a destination for millions including ourselves.
This partnership will enable Namshi to make the investments and improvements necessary to bring exceptional service to all of our customers.
This is also a positive development for Rocket Internet’s Global Fashion Group (GFG), who has recently been under pressure for its valuation has been slashed by two-thirds due to partners getting acquired by powerful competitors. Even Jabong, which was based on a copy-cat model, was sold off to Flipkart-owned fashion e-commerce platform Myntra for a massive $70 million. As you might expect, Namshi also operates on a similar business model.
Headquartered in Dubai, Namshi was founded by co-founders Faraz Khalid, Hisham Zarka, Hosam Arab, Do Hai back in 2011. It’s Rocket Internet’s smallest and only profitable operation, with a presence in UAE, Saudi Arabia, Qatar, Kuwait, Oman, and Bahrain. The company has managed to secure funding of around $33 million in three rounds, from marquee investors including the likes of Kinnevik AB, Summit Partners, JPMorgan Investment, Blakeney Management, and others.
In the blog post, the fashion e-commerce player states that the fiscal year 2016 was stupendous and they reported over $150 million in net revenue and first full-year of profitability and positive cash flow. Emaar’s transaction is all-cash and is expected to close in the next three odd months.