BinDawood Holding, the Saudi Arabian supermarket retailer, has bought a 80.5 per cent majority stake in French agency Ykone as the company seeks to tap the strength of influencer marketing and boost its e-commerce portfolio.
The Jeddah-based company, through its subsidiary Future Technology Retail (FTR), will complete the transaction through FTR's newly-established French unit, BinDawood said in a statement on Wednesday.
FTR has the option to buy an additional 4.9 per cent of shares in Ykone, with the balance to be held by Ykone's founder Olivier Billon and management.
The value of the deal, which is expected to be closed soon, was not disclosed.
Paris-based Ykone, in turn, will be able to benefit from the support of BinDawood's financial and commercial strengths to improve its technology platform, while diversifying into other industry segments and accessing more Middle East markets, it said.
“The acquisition of Ykone represents another important milestone in Future Technology Retail’s ambition to invest in all segments of the retail e-commerce value chain,” Ahmad AR BinDawood, chief executive of BinDawood Holding, said in the statement.
“This investment in cutting-edge marketing technology and a trusted, full-service agency, with a global and local footprint, will strengthen the growth of our business and enhance our focus and nimbleness … while providing a platform to Ykone for accelerated growth in the Middle East and beyond.”
BinDawood's acquisition of Ykone — plans of which were first reported on Sunday — follows a similar move in March when it bought a 62 per cent majority share in its e-commerce partner International Applications Trading Company, a move also meant to capitalise on the higher demand for online shopping.
The company intends to capture 30 per cent of Saudi Arabia’s e-grocery market by 2028 as online sales continue to increase after the coronavirus pandemic, it had said.
Social influencer marketing has grown worldwide because of a change in consumer habits after the pandemic, with strong growth in the Middle East, according to BinDawood.
The grocery retail market in Saudi Arabia is forecast to grow 2.8 per cent annually between 2020 and 2027 to reach 177.5 billion riyals ($47.33bn), while total grocery e-commerce penetration is expected to grow to 3.5 per cent by 2027 from 0.8 per cent currently, BinDawood previously said, citing data from Euromonitor and KPMG.
The kingdom's e-commerce market, which grew about 60 per cent in 2019-2020 amid a digital surge that accelerated during the pandemic, is poised to hit $13.3bn by 2025, according to Boston Consulting Group and Meta Platforms.
The influencer marketing industry, meanwhile, is poised to grow to about $16.4bn in 2022, data provider Influencer Marketing Hub said in its most recent survey.
Platforms focused on influencer marketing raised more than $800 million in funding in 2021 alone, which is an indication of the industry's significant growth, while the number of influencer marketing-related service offerings globally grew 26 per cent in 2021 to 18,900 firms offering or specialising in these services, it said.
Ykone will bank on its strengths to provide BinDawood strategy execution, production and data analyses on the back of its “strong expertise” in the retail space, Mr Billon said.
“This partnership with BinDawood Holding marks a milestone in the incredible growth and success we have achieved to date and will propel our growth across the Gulf States in the retail, travel, tourism and entertainment sectors,” Mr Billon said in the statement.
BinDawood in May reported that first-quarter profit rose 5.4 per cent to 65.5m Saudi riyals ($17.5m) on higher revenue driven by the start of the school term and the easing of coronavirus-related restrictions.
Ykone, with a presence in Riyadh, Abu Dhabi and Dubai, aims to tap into more of the potential of the Gulf states in the retail, travel, tourism and entertainment sectors.