Dubai-based buy-now-pay-later company Postpay secured an equity investment of $10 million from London-based venture capital firm AP Ventures and global FinTech Afterpay.
This equity investment “represents an important milestone in the Middle Eastern FinTech space”, the company said on Monday.
The investment positions Postpay to best serve retail groups and brands across the GCC and the rest of the Middle East and North Africa region, it added.
“For Postpay, this strategic investment provides not only capital to enable us to accelerate our growth but also an opportunity to collaborate and bring new learnings from our new shareholders as we expand in the Mena region,” Tariq Sheikh, founder and chief executive of Postpay, said.
The buy now, pay later 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 as consumers switched to shopping online.
Mubadala-backed Tabby secured $50m from Silicon Valley-based Partners for Growth earlier this month. Australia's Zip, a global buy-now-pay-later platform, acquired Dubai-based Spotii for $16.25m last month.
The industry is expected to grow 10 to 15 times by 2025 worldwide, topping $1 trillion in annual gross merchandise volume by some estimates, according to a report by New York data research consultancy CB Insights.
Postpay works with global brands, including H&M, Footlocker, Dermalogica, and regional names such as Alshaya Group, The Entertainer and Kcal.
“We have seen first-hand the incredible uptake of BNPL globally and have no doubt that Postpay will deliver a best-in-class solution across the Middle East,” Anthony Eisen, co-chief executive and co-founder at Afterpay, said.
In addition to the investment, which is expected to complete soon, AP Ventures will also nominate a director to join Postpay’s board, a statement said.
Postpay was founded in 2019 in Dubai and offers shoppers the option to pay in three monthly instalments at their partner stores with no interest or fees.
The BNPL company increases conversion rates up to 30 per cent, average order values by more than 50 per cent and reduces return rates by more than 25 per cent while retailers get paid upfront on a weekly basis, the statement said.
“We believe that Postpay has an extremely strong team, product and partner base to ensure market leadership in the region. Our investment in Postpay fits well with our overall strategy and complements our other BNPL investment in Asia as well,” Hein Vogel, chief executive at AP Ventures, said.
AP invests in high-growth, scalable businesses and typically invests $10m to $25m to help companies scale up to their full potential.
Afterpay, which is available in Australia, Canada, New Zealand, the US, the UK, France, Italy and Spain, has more than 14 million customers. About 86,000 global retailers offer Afterpay as of March 2021.