Tabby becomes first Islamic fintech unicorn

The Islamic finance industry has welcomed its first Islamic fintech unicorn, Tabby, a buy-now-pay-later (BNPL) platform as the Middle Eastern firm secured a US$200 million Series D funding.

Founded in 2019, Tabby joins a list dominated by US-based firms, but led by Chinese e-commerce giant Ant Technology which was valued at $79 billion in July. Shopify, PayPal, Stripe and Brazil’s Nubank make up the top five highest valued fintech unicorns followed by Revolut, Afterpay and Block among others.

Tabby becomes industry’s first Islamic fintech unicorn

Led by new backer Wellington Management, the round was participated by Bluepool Capital and existing investors STV, Mubadala Capital, PayPal Ventures and Arbor Ventures. The latest capital injection elevates Tabby’s valuation to US$1.5 billion.

Tabby becomes first Islamic fintech unicorn

Tabby set out with a purpose to reshape financial services – one that’s fair and responsible – and with this investment we can advance our mission across Saudi Arabia and the UAE,” Tabby said in a statement. It is currently servicing those two markets as well as Kuwait, having exited from Egypt earlier in February.

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Originally headquartered in Dubai, the Islamic BNPL is preparing to relocate its headquarters to Saudi Arabia ahead of its IPO on the Saudi Exchange. It was granted a license by the Saudi Central Bank in July.

Founded in late 2019 by entrepreneur Hosam Arab and Daniil Barkalov, Tabby rose relatively quickly to become one of the region’s most funded start-up, raising at least US$410 million over 10 rounds (prior to the latest Series D funding), according to data provider Tracxn.

It has built a user base of over 10 million customers and, 80% of which are from Saudi Arabia, and grown its merchant network to over 30,000 brands.

Tabby, which acquired Shariah compliance in 2021, is riding on the phenomenal rise for BNPL services. The global BNPL market is projected to reach US$20.4 billion by 2028, registering a cumulative annual growth rate (CAGR) of 22.4% from 2021-28, according to Grand View Research.  In Saudi Arabia, BNPL payments are expected to rise by 50.1% to US$284.7 million this year with a CAGR of 16.4% over the same period.

Tabby’s fundraising success may shine the spotlight on Shariah compliant fintech services and lend more weight to other Islamic fintech start-ups as they face the challenge of lack of Islamic finance understanding and confidence among investors. Afterall, rising tide lifts all boats.

The financing will allow the shopping and financial services app to serve increased demand for its buy now, pay later offering, which reportedly manages over $6 billion in annualised transaction volume. Its use as a payment method in physical stores, including Tabby Card, has continuesd to accelerate, now reaching over 20% of total volumes, the company said.

Hosam Arab, CEO and Co-Founder of Tabby, said: “Tabby set out with a purpose to reshape financial services–one that’s fair and responsible–and with this investment we can advance our mission across Saudi Arabia and the UAE. We’re very happy to have Wellington Management lead this round given their deep expertise in financial services.”

Abdulrahman Tarabzouni, Founder and CEO of STV, added: “Tabby created a new industry and is transforming the way people consume and pay across MENA. Hosam and team built an iconic enterprise that is a reference model in terms of both discipline and disruption; two things that are hard to crack in-tandem. We are excited to see Tabby become an integral part of Saudi’s fintech landscape, nurturing growth and empowering the broader economy.”

In May, Tabby upsized its debt facility to $350 million after closing a new financing round led by San Francisco-based Partners for Growth (PFG), along with Atalaya Capital Management and CoVenture. More recently, the company launched Tabby Shop, a digital shopping assistant designed to help simplify the shopping process.

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