Mubadala-backed Tabby raises $150m in debt financing

The deal represents one of the largest credit lines secured by a FinTech company in the GCC

Tabby’s platform went live in February 2020 and the company has since signed agreements with more than 3,000 global brands and small businesses. Photo: Tabby

Dubai-based buy now, pay later company Tabby secured $150 million in debt financing from two US-based companies in one of the largest credit lines secured by a FinTech start-up in the GCC.

The financing from New York-based Atalaya Capital Management and existing investor Partners for Growth (PFG) “fortifies Tabby’s balance sheet and supports its sustained growth in transaction volumes and product expansion”, the company said on Wednesday.

“Debt commitments from two reputable institutions [are] validation of our strong track record and business model,” said Hosam Arab, chief executive and co-founder of Tabby.

“As we near profitability, we are in the fortunate position of not having to raise equity under the current market conditions.”

Debt financing is an alternative option for a company to raise capital by selling debt instruments to institutional investors, who then become creditors, according to Investopedia.

Under the agreement, the principal and interest on the debt will be repaid to investors, it adds.

The BNPL business model, which allows consumers to make online purchases instantly and spread their payments out over interest-free instalments, has boomed since the onset of the Covid-19 pandemic.

Global BNPL transaction values are projected to grow to $576 billion by 2026, up from $120bn in 2021, according to data analytics company GlobalData.

BNPL accounted for 2.3 per cent of the global e-commerce market in 2021, with $2 out of every $100 spent going towards a BNPL transaction, the report said.

Millennials and Generation Z are the main demographic groups driving the adoption of the BNPL model, the research found.

Tabby’s platform went live in February 2020 and has since signed agreements with more than 3,000 global brands and small businesses, including H&M, Adidas, Nike, Ikea, Bloomingdale’s, Marks & Spencer, Swarovski and Toys R Us.

Securing debt commitments from two reputable institutions is validation of Tabby's strong track record and business model, says chief executive Hosam Arab. Antonie Robertson / The National

In addition to Tabby, there are a number of players such as Postpay, Cashew, Spotii and Tamara that are also jostling for a share of the Middle East BNPL market.

This is the first deal in the Mena region for Atalaya Capital Management, Tabby said.

“Atalaya is excited to partner with Tabby in its mission to expand access to credit and payments in markets where there are limited existing options,” said Atalaya Capital managing director Justin Burns.

San Francisco-based PFG increased its initial $50m commitment under the new credit line, the platform said.

Tabby’s rapid growth, while improving its unit economics, is “impressive”, said Max Penel, co-head of global FinTech at PFG.

After Tabby’s series B funding round earlier this year, total capital raised by the BNPL company to date now stands at $275m.

It raised $54m from Sequoia Capital India and Saudi Arabia’s STV in March. Existing investors Mubadala Investment Company, Arbor Ventures and Global Founders Capital also participated in the company’s extended funding round, which began last year.

Tabby said it recorded a tenfold growth in revenue, an eightfold increase in active customers and threefold rise in retailer partners in the first half of 2022, compared with the same period last year.