Streaming platform Anghami to list on Nasdaq after merger
▶ Company will be region’s first tech start-up to go public in New York after $220m valuation
Anghami, the music streaming rival of Spotify in the Arab world, is merging with a blank-cheque company and will list on the Nasdaq in New York.
The deal with Vistas Media Acquisition Company (VMAC), a special purpose acquisition company (Spac) set up last year, will value Anghami at $220 million, or about 2.5 times its 2022 estimated revenue.
Anghami will raise $100m in funding through the deal and about 70 per cent of proceeds will be reinvested to spur growth, co-founders Eddy Maroun and Elie Habib told The National yesterday.
Spacs, which are listed companies, are often formed to merge with private ventures, allowing them to become publicly traded entities. The process, which is quicker than an initial public offering, helps to avoid uncertainties associated with a public float.
Spacs have become a popular way for venture-backed start-ups to list on public markets.
Most of the funds will be channelled into growth marketing as it works to exploit the region’s untapped potential, Mr Maroun said.
Anghami and Nasdaq-listed VMAC, which raised $100m through its listing last year, signed a definitive merger agreement.
The combined company will operate under the Anghami name and the transaction is expected to close in the second quarter of the year.
Mr Maroun will remain as chief executive of the company and Mr Habib will continue as its chief technology officer. They will be the largest shareholders in Anghami after the deal.
Anghami will explore cross-listing in a secondary market in the UAE or Saudi Arabia once it has put growth plans in place. The streaming company, which moved its global headquarters and its research and development centre from Lebanon to Abu Dhabi’s tech accelerator Hub71 in January, has offices in Beirut, Dubai, Cairo and Riyadh.
Music streaming service Anghami is set to become the region’s first technology startup to list on the Nasdaq in New York, after merging with a black-cheque company.
The investment by Vitas Media Acquisition Company will be one of the biggest in a technology start-up this year.
The deal valued Anghami, Spotify’s rival in the Arab world, at $220 million, or about two and a half times its estimated revenue for 2022.
VMAC is a Nasdaq-listed special-purpose acquisition company, or Spac, set up last year.
Anghami will raise about $100m through the deal and about 70 per cent of the proceeds will be reinvested to drive growth, founders Eddy Maroun and Elie Habib told The National yesterday.
UAE investment bank Shuaa Capital and VMAC parent, Vistas Media Capital, gathered commitments worth $40m in private investment in public equity, or Pipe, financing.
Shuaa, which invested in
Anghami in an earlier funding round, committed $30m while Vistas contributed the remainder.
“We are raising four times more capital than we raised our entire life,” Mr Habib said. “Over the past nine years, we have raised $26m.”
Mr Maroun said once the merger is completed and Anghami has its growth plans in place, it will look to cross-list on an exchange in the UAE or on Saudi Arabia’s Tadawul, the biggest Arab stock exchange.
“Nasdaq is liquid and this raises the profile of the company. But there is nothing that prevents [us] from listing in the region,” he said.
“That, hopefully, [will be] the next stage” of growth for the company, he said.
Anghami and VMAC, which raised $100m in the year it listed, signed a definitive merger agreement.
The merged entity will operate under the Anghami name and the transaction is expected to close in the second quarter of this year.
Spacs are listed companies that are often formed to merge with private ventures, allowing the latter to go public. The process, which is quicker than an initial public offering, helps to avoid the uncertainty associated with a public float.
Spacs have become a popular way for venture-backed start-ups to list.
Start-ups in the Mena region broke a record after securing more than $1 billion in funding last year despite the coronavirus-induced slowdown, with technology ventures attracting capital, according to data platform Magnitt.
The bulk of the funding was raised during the first six months of the year.
Private ventures have so far relied on venture capital or strategic investment for financing.
However, the emergence of
Spacs expands their listing and financing options.
Mr Maroun will be chief executive of the merged entity while Mr Habib will be chief technology officer.
VMAC chief executive F Jacob Cherian is expected to join the company as co-chief executive for a year. The co-founders, will remain the largest shareholders after the transaction, said Mr Maroun.
He said 30 per cent of the Spac’s cash will be distributed to current shareholders.
Anghami is currently backed by some of Mena region’s venture capitalists and strategic shareholders, including media groups and telecoms companies that own about 68 per cent of the company. The rest is controlled by the founders.
The company said the mix of cash and equity paid to existing Anghami investors will depend on the amount of cash in trust after redemptions, the amount of capital raised through Pipe financing and transaction costs.
The enterprise value remains fixed at about $220m regardless of redemptions and Pipe proceeds.
Anghami, which moved its global headquarters and its research and development centre from Lebanon to Abu Dhabi’s technology accelerator Hub71 in January, has offices in Beirut, Dubai, Cairo and Riyadh.
Founded in 2012, the music streaming service offers more than 57 million songs to its 70 million registered users and has about a billion streams each month.
There are more than 450 million Arabic speakers worldwide and a listing on Nasdaq will allow Anghami to expand its user base, said Mr Maroun.
Most of the funds will go to “growth marketing because we believe the region has a lot of depth and untapped potential”, he said.
“We have plans to grow into [the Arab] diaspora outside the region and this is also a massive market of more than 100 million people that we never invested in.”
He said the company is also looking at some emerging markets and will continue to boost its spending on R&D and technology to strike more international partnerships.
Once the merger is completed, Anghami plans to cross-list on an exchange in the UAE or Saudi Arabia