Gulf Capital invests over AED 500 million in technology and ecommerce
Gulf Capital becomes one of largest investors in the digital economy in GCC, injecting over half a billion dirhams in regional internet and ecommerce companies.
Gulf Capital, one of the largest and most active alternative investment firms in the Middle East, has announced the deployment of over half a billion dirhams (over AED 500 million) to date in technology and ecommerce investments across the GCC, making it one of the largest technology investors in the region.
The firm has invested in the leading regional online B2B hospitality platform, the largest Middle Eastern auction platform and the leading online sport-based products and supplements marketplace.
Speaking at a recent tech conference, Dr Karim El Solh, Chief Executive Officer of Gulf Capital, said, “The technology scene is rapidly evolving in the GCC, and we are seeing the rise of a number of regional players that are becoming market leaders on both the regional and global fronts. Gulf Capital is actively backing and investing in these market leaders and helping them graduate to the next level. We expect a number of success stories to emanate from the region, many represented here at this year’s Step Conference. We forecast a substantial increase in technology investments in the GCC and significant returns to be generated for the early backers of these technology companies.”
Gulf Capital's first technology investment was in Destination of the Word which has become one of the largest online accommodation wholesalers in the world, with footprints extending from North America to Asia Pacific. Gulf Capital has also invested in two e-commerce platforms, namely Sporter.com, the leading sport-based products and supplements marketplace and Emirates Auction, the largest auction site in the Middle East.
“The digital economy is having a transformational impact on our lives and economies, and ecommerce is at the heart of it. It is perhaps the top mega trend that will have a profound impact on every business in the GCC in the coming years. The region has historically been famous for its commerce traditions, linking East and West through the silk and spice trade routes. We are fortunate to have commerce in our DNA and today, with one the highest adoption rates of mobile and internet technology in the world, the GCC region is set to witness an explosion in ecommerce activities. This trend will undoubtedly generate attractive investment opportunities for regional and global investors," he added.
According to Boston Consulting Group (BCG) the digital economy, which contributed $2.3 trillion to GDP in the G-20 in 2010 and is estimated at more than $4 trillion in 2016, is growing at 10 per cent a year; significantly faster than the global economy as a whole. The growth in the digital economy is even higher in emerging markets: 15 per cent to 25 per cent per year. B2C ecommerce, in particular, is growing at higher rates in MENA and other emerging markets, compared to more mature ones. In MENA, B2C ecommerce grew at 20 per cent in 2015, compared to 11 per cent in the UK, 12 per cent in Germany, 7.7 per cent in France, 33.3 per cent in China, 22 per cent in Brazil and 12.5 per cent in North America.
“Regional ecommerce is still small when compared to world averages, but this is set to change,” Dr. El Solh explained. “Recent transactions like Amazon buying the leading regional online marketplace Souq.com demonstrate the huge potential global players see in this market. At the moment, the share of ecommerce in the GDP of the Middle East and North Africa region is at the bottom of the world list, with the eGDP representing 0.71 per cent, against a global average of 3.11 per cent, according to a research conducted by Ecommerce Foundation. So, however you look at it, the regional growth potential is huge.”
The UAE, Saudi Arabia, Egypt, Jordan and Lebanon remain the leading regional hubs for tech startups and hence are attracting significant early stage and private equity investments. “Growth capital investors are closely looking at local technology firms which can disrupt industries, scale up and become leading regional and global players. Given that it is still early days, the prospects for regional ecommerce and technology companies are very promising.”