Mubadala-backed Tabby increases debt facility to $350 million

The additional financing will support the buy now, pay later provider's core business

The additional financing will support Tabby’s core BNPL business and allow it to serve more customers, retailers and purchases. Photo: Tabby

Dubai-based buy now, pay later platform Tabby has more than doubled its debt facility to $350 million in a new financing round.

The Mubadala-backed FinTech company secured the financing from global credit investors led by US-based Partners for Growth, Atalaya Capital Management and CoVenture, it said in a statement on Wednesday.

Tabby previously procured $150 million in debt financing from Atalaya Capital Management and PFG in August last year in one of the largest credit lines secured by a FinTech start-up in the GCC.

The financing “reflects the remarkable growth the company is experiencing with more than four million active customers”, the company said.

“We are thrilled to partner with investors Atalaya, CoVenture and PFG to continue supporting Tabby’s growth and redefining what people can do with their money,” said Hosam Arab, chief executive and co-founder of Tabby.

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

Under the agreement, the principal and interest on the debt will be repaid to investors, Investopedia added.

The BNPL business model, which allows consumers to make online purchases instantly and spread their payments out over interest-free instalments, has become highly popular since the onset of the coronavirus pandemic, driven by millennials and Generation Z.

Global BNPL transaction values are projected to grow to $576 billion by 2026, up from $120 billion 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 towards a BNPL transaction, the report said.

Tabby’s platform went live in February 2020. Since then, it has signed agreements with more than 15,000 global brands and small businesses, including H&M, adidas, Ikea, Noon and Bloomingdale’s.

The FinTech start-up is active in Saudi Arabia, UAE and Kuwait.

“Tabby’s ability to deliver robust top-line growth while simultaneously improving economics is a rare accomplishment,” said Justin Burns, managing director at Atalaya Capital Management.

The additional financing will support Tabby’s core BNPL business and allow it to serve more customers, retailers and purchases, the company said.

In January, the FinTech company raised $58 million in a Series C round from investors including PayPal Ventures, Sequoia Capital India and Saudi Arabia’s STV, which valued it at $660 million.

The round made Tabby one of the most valuable start-ups in the Middle East and North Africa and the first in the GCC to receive funding from PayPal Ventures, the venture capital arm of PayPal.

The company also raised $54 million from Sequoia Capital India and STV last March.

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's BNPL market.