Dubai to have another unicorn as Bayut, dubizzle mother companies set to merge
Merger is the latest in a series of entrepreneurial successes that reinforce Dubai's reputation as a global hub for investment and innovation.
Property portal Bayut's parent company Emerging Markets Property Group (EMPG) and classified website dubizzle's owner OLX Group have decided to merge their operations, creating another billion dollar company in the emirate's technology sector.
Under the deal, OLX has become EMPG's largest single shareholder with 39 per cent of shares. In the UAE, both dubizzle and Bayut will be operated by EMPG. Global presence for EMPG other than the UAE includes Pakistan with Zameen, Bangladesh with Bproperty, Morocco and Tunisia with Mubawab, and Thailand with Kaidee, with all assets under EMPG ownership.
Existing shareholders of the two parent firms will invest Dh550 million in the merged entity.
The merged entity will have 10,600 employees, over 530 million monthly users, around 27 brands under its portfolio with presence across more than 40 countries.
Technology analysts say that this marriage is purely driven by the need to scale to better compete in the intensively competitive and fast-growing e-commerce sector. A number of e-commerce platforms have mushroomed in the UAE and across the region over the years that led to merger and acquisition by the local as well as foreign players.
"E-commerce is going through the roof across the board and competition is very intensive. E-commerce is a game of scale. Firms have to get their business volume to a certain level before they can start monitise and make decent profit. Otherwise it is too costly," said Adel Belcaid, partner, Kearney, said.
He pointed out that key potential drivers that led to EMPG-OLX merger is sharing synergies such as technology platform and costs, access to bigger customers base, going after more segments and offer one-stop shop to corporates and individuals alike.
EMPG and OLX merger is second major unicorn deal of Dubai-based startup technology firms in past one year after Uber's $3.1 acquisition of ride-hailing app Careem.
"EMPG will use the new capital to develop a range of new services, creating a more seamless user experience, enhancing data transparency, and deepening market intelligence for both consumers and business users," An OLX Group spokesperson said in a statement to Khaleej Times.
Ammar Al Malik, managing director of Dubai Internet City, where Bayut and dubizzle started, said even in these exceptional times, Dubai has demonstrated its attractiveness as an international investment destination.
"Our infrastructure and business-friendly environment have created an enabling ecosystem for entrepreneurs to scale up their ventures in a community that is home to everyone from startups to Fortune 500 companies," he said.
At par with Silicon Valley
Though the UAE's startup ecosystem is better but there is still a lot more to do to take it to the next level where it can compete with the likes of Silicon Valley.
"Startup scene has evolved a lot with support of government and key stakeholders. We have seen local startups getting global attention and it shows that we can do it," Adel Belcaid said, adding that in order to give fillip to the sector, the startups need better access to capital, better coaching and support for entrepreneurs and develop venture capital teams.
In order to keep up with the pace of developing the startup ecosystem, Vijay Valecha, chief investment officer at Century Financial said, there needs to be continued focus on ease of entry and set-up for startups.
"There is a lack of transparency about benefits that are available across free zones and institutions for comparison purposes. Establishing standardised requirements to be eligible for benefits including discounted licenses, banking requirements etc. will create a balance among founders and their support services," he added.
In addition, the lack of a cohesive data can make researching the industry and achieving success difficult.
"In general, communication is missing among entrepreneurs in the region. Entrepreneurs don't spend enough time speaking to other entrepreneurs to empower one another. A lot needs to be done to embrace and bring the community together as a voice to challenge the norms," Valecha added.
"Fundamentally some of the bureaucratic and infrastructural challenges here need to be addressed if we are to take the ecosystem to the next level," he added.
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