Online retailer wins investor confidence

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Namshi Dubai Fashion
A collage of offers from Dubai-based online venture Image courtesy-namshi

Summit Partners, a US-based growth equity firm, has decided to invest in Dubai-based e-commerce site

The total value of investment remains undisclosed and follows a recent investment of USD 20 million by JP Morgan Asset Management and Blakeney Management. The investment by JP Morgan Asset Management and Blakeney Management was to be used for regional expansion, particularly in the Saudi Arabian market and increasing the product portfolio. Summit Partners has funded more than 350 businesses across North America, Europe and Asia, and raised about USD 15 billion since its launch.

Launched in December 2011, Namshi has pioneered online retailing of shoes and clothing in the Middle East. The site features more than 550 international brands and offers free of cost shipping of over 12,000 products from its Dubai-based distribution centre. The business started as a three-person operation and has now over 140 people.

Khalid, Namshi’s co-founder and managing director, believes that “the e-commerce opportunity is very exciting and this is why we see more international funds looking into this market and exploring opportunities”. Investor interest in Namshi signifies that online retailing has great growth potential and business can be expanded across the Gulf through diversification of product portfolio.

The UAE is seen as a leader in e-commerce market, with online spending totaling around USD 2 billion in 2010. A study by Visa and Interactive Media in Retail Group International estimates the UAE’s online spending to about 55 percent to 60 percent of total GCC e-commerce sales last year. The UAE online retail market is followed by Saudi Arabia (USD 520 million), Qatar (USD 375 million), Kuwait (USD 280 million), Bahrain (USD 175 million) and Oman (USD 70 million). The growing sales volume has been backed by increasing internet penetration in the Gulf region, with the number of internet users climbing up to 18.7 million in 2010 from 1.2 million in 2000.

Some of the biggest acquisitions and investments in middle east based online ventures in the past:

August 2009– Yahoo acquires Jordan based popular arabic portal Maktoob. The deal was estimated at between $75-$100 million.

June 2011South Africa based Internet company Naspers acquired a stake in Middle East online classifieds website The terms of the deal were not disclosed though some sources estimate the deal to be worth $2 million.

June 2011– GoNabit, the Middle East’s home-grown website for daily deals was acquired by the US based LivingSocial. The value of the deal was not disclosed although some sources estimated it to be as much as $5 million.

December-2011 – Jordan-based online retailer MarkaVIP secured $5 million in funding, the largest investment of its kind for an e-commerce company in the Middle East.

April 2012– MarkaVIP gets a new round of funding worth $10 million dollars, a consortium of investment companies led by Netherlands investment firm Prime Ventures including New York City-based Invus Financial Advisors, Antwerp-based Hummingbird Ventures, and San Francisco-based Lumia Capital.

June 2012Zawya, one of Middle East’s leading news and information service provider was bought out by Thomson Reuters Corporation, a global news wire service and information provider. Financial terms of the deal were not disclosed, but the sale was estimated at somewhere in the range of $40 million.

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