Anghami, the leading music streaming platform in the Middle East and North Africa, is going public by merging with a special purpose acquisition company, or SPAC.
SPACs are also known as blank check companies and are formed to raise money through an IPO with the aim to buy an existing company and take it public.
Anghami will merge with is Vistas Media Acquisition Company, which is led by F. Jacob Cherian alongside co-founders Saurabh Gupta and Abhayanand Singh. Vistas went public on Nasdaq about six months ago in a USD 100 million IPO. As a result of the deal, Anghami will become the first Arab technology company to list on Nasdaq and will trade under the symbol ANGH.
The transaction is expected to close in the second quarter of 2021 and implies an initial pro-forma enterprise valuation of approximately USD 220 million, 2.5 times Anghami’s 2022 estimated revenues. As a statement issued by Anghami points out, this compares to Spotify’s current revenue multiple of 6.5 times.
Founded in 2012 by Eddy Maroun and Elie Habib in Lebanon, Anghami currently offers over 57 million songs to more than 70 million registered users, recording about 1 billion streams every month. The startup recently moved its headquarters to Abu Dhabi and has offices in Beirut, Dubai, Cairo, and Riyadh. It had raised a little over USD 25 million from leading investors in the region, including Samena Capital, Middle East Venture Partners (MEVP), and MBC Ventures. The investors hold a 68% stake in the company, while the rest is owned by Anghami’s founders. About 60 employees of the company also own stock options.
The deal includes USD 40 million of combined commitments in a PIPE (private investment in public equity) from the UAE’s Shuaa Captial (which announced it is investing in Anghami earlier this year) and Singapore-based Vistas Media Company, parent of the SPAC sponsor. Anghami expects to have USD 142 million in cash on its balance sheet at closing that will be used to fuel the company’s growth.
Jassim Alseddiqi, group CEO of Shuaa, said, “We are delighted to be leading the PIPE for Anghami’s business combination with VMAC in what will accelerate Anghami’s growth and build upon its success as a pioneer in the music streaming space in the Middle East and North Africa. Shuaa led a funding round for Anghami earlier in the year and has been working closely with the team to secure the PIPE investment and deliver a successful listing on Nasdaq. In addition, the enhanced reputation and access to capital that comes with a listing on Nasdaq accelerates the company’s growth journey.”
Anghami’s founders will continue to lead the company. F. Jacob Cherian, the CEO of Vistas Media Acquisition Company, is expected to join the combined company as co-CEO for a period of one year.
Elie Habib, co-founder of Anghami, told MENAbytes that they were not thinking about going public a year ago. “We started working on the SPAC in mid-November [in 2020]. It is way better to do a SPAC to raise money if your structure is right. With access to equity markets, we can continue to grow the company on our own terms without having to think about the exit. We had also tried to fundraise over a year ago and realized that the market was not good for fundraising. We then changed our priorities to focus on growth using our internal cash flow.”
He also said that they plan to use the money they will raise by going public to fuel company’s growth, including investments in content. “We believe there’s lack of content in the region. For context: 1% of Anghami’s content generates 50% of our traffic. We need to invest in Arabic content. We need to invest in Arabic artists.”
The Abu Dhabi-headquartered startup aims to increase its penetration in existing markets and launch its products in other similar emerging markets.
Anghami had introduced music streaming in the Middle East in 2012, but has been facing competition from international rivals like Spotify and Deezer for the last three years after their expansion to the region.
“Our IPO should serve as a message of hope for people and entrepreneurs in the region,” Habib said to MENAbytes. “Let’s work together. If we give away our culture, our music to foreign companies, we will be left with nothing in the end.”
Eddy Maroun, co-founder and CEO of Anghami, said, “Today is a very exciting day for all of us at Anghami and our partners globally. Elie and I co-founded the company in 2012 with a vision for Anghami to be a first-of-its-kind, digital media entertainment technology platform in the MENA region. Today, we have taken a significant step forward in our growth plans in seeking to become the region’s first Arab technology company to list on Nasdaq. Being a US-listed public company gives us access to growth capital and a global platform that is the best in the world.”
In the last 18 months, SPACs have become a very popular tool for companies to go public. Elie hopes that their listing on Nasdaq will inspire other Middle Eastern startups to take similar steps, but he also warns that SPACs are not for every company. “The structure and governance have to be right. You have to be ready to do it. Anghami has been profitable throughout 2020, which was a very difficult year, so we’re very optimistic about the future.”
In a statement, the music streaming company said that its revenues have grown 80% over the last three years and are expected to increase fivefold over the next three years.
Rabih Khoury, managing partner of Middle East Venture Partners (MEVP), commented on the deal and said, “As the largest institutional investor in Anghami, we at MEVP are delighted that one more of our top portfolio companies will list on Nasdaq, the leading global market for technology. We have partnered with Eddy and Elie from the outset in 2012 and continuously supported Anghami starting with its seed round and all its subsequent funding rounds.”
This article was first published by MENAbytes.