Dubai-based popular buy now, pay later (BNPL) company Tabby, has received $50 million from US-based Partners for Growth in one of the largest debt facilities availed by a FinTech start-up in the Middle East and North Africa (MENA).
The financing marks a significant milestone in the region’s startup environment and demonstrates the growing maturity of the FinTech landscape. The investment will “bolster Tabby’s capitalization to expand lending capacity and support the company’s growth”, it said.
Mr. Hosam Arab, Chief Executive Officer Tabby remarked that “as our transaction volumes and merchant numbers have continued to surpass all our expectations, it was essential for us to partner with an organization that would support our current and long-term growth.”
The BNPL business model, which lets consumers make online purchases instantly and spread the payments out over interest-free installments, has exploded since the outbreak of COVID-19 as more people choose to buy online.
According to a report by New York data research consultancy CB Insights, the worldwide BNPL industry is predicted to increase 10 to 15 times its current volume by 2025, hitting $1 trillion in annual gross merchandise volume by some estimates.
Mr. Max Penel, Investment Director at Principal Financial Group pointed out that “Tabby is one of the fastest-growing companies in the MENA region and they have an attractive market opportunity ahead.”
Tabby raised $23 million in initial venture capital funding in December last year led by Arbor Ventures and Mubadala Capital. The company said that the money would be used to fuel the company’s next stage of growth.
Tabby’s platform operated in February 2020 and has agreements with 2,000 large and small retailers including Ikea, Marks & Spencer, Home Centre, and Toys R Us.
The startup launched a loyalty program earlier this month that rewards customers with tangible cash that they can use to fund new purchases, settle future payments, or deposit into their bank accounts.
The industry is also ripe for deal-making with many local BNPL companies bagging sizeable investments this year.
Saudi Arabia-based BNPL Tamara recently raised $110 million in debt and equity financing from Checkout.com.