Emaar Malls to Acquire 51 Percent Stake in Namshi
Dubai's Emaar Malls will buy a 51 percent stake in e-commerce fashion website Namshi from Global Fashion Group (GFG), a start-up set up by Rocket Internet, for $151 million as competition for technology deals heats up in the Middle East.
Coming two months after Amazon agreed to buy Souq.com, the transaction is expected to provide much-needed support for Emaar Properties founder and chairman Dubai billionaire Mohamed Alabbar's new technology vehicle Noon.com, a venture with Saudi Arabia's Public Investment Fund.
The venture has seen a shake-up in recent weeks with the departure of Noon's chief executive and chief technology officer along with several staff. Alabbar said last week its venture still on track to start operations before end-2017.
Emaar Malls, the retail arm of Emaar Properties, was unsuccessful in the deal process for Souq.com, after an eleventh hour bid, which the company said was worth $800 million. Advisor Goldman Sachs described the Souq deal as "the biggest-ever technology M&A transaction in the Arab world".
Emaar will buy the stake in Namshi in an all cash transaction, which is expected to close in three months, it said in a statement on Wednesday.
It is buying the stake from GFG, a start-up founded by Rocket Internet, in which the German e-commerce investor still has a 20 percent stake. The other major investor in GFG is Swedish investor Kinnevik, which holds 35 percent.
Alabbar, founder and chairman of Dubai's Emaar, the developer of the world's tallest tower the Burj Khalifa, has increasingly focused on technology investments and e-commerce in the past year, buying a stake in regional logistics firm Aramex.
The Gulf region's e-commerce market is expected to grow to $20 billion by 2020, according to a report by global consultancy A.T. Kearney published last year.
Amazon's acquisition of Souq.com was expected to trigger consolidation in the sector, Namshi's co-founder said in an interview with Reuters in March.
"Generally, Amazon comes into a market and very quickly is able to dominate. In India, for example, it caused a number of companies to shut down or massively retrench," Hosam Arab said.
"General merchandise players should be especially worried if they cannot provide their customers with clearly differentiated value propositions. Pure players like Namshi for example will be challenged but potentially less so," he added.