Starzplay eyes IPO by 2024 amid plans to double its business

Dubai-based company secures $25m in debt financing from Abu Dhabi's Ruya Partners

Maaz Sheikh, co-founder and CEO of Starzplay. The streaming services company secured its first independent debt financing in the region of $25 million from Abu Dhabi based Ruya Partners. Courtesy StarShow more

Dubai-based Starzplay, the Middle East and North Africa's fastest-growing video streaming service, is eyeing an initial public offering by 2024, propelled by a surge in demand during the pandemic.

The move is part of wider growth plans to double its revenue and subscribers within three to four years, Maaz Sheikh, co-founder and chief executive of Starzplay, told The National. 

Revenue grew 50 per cent year-on-year in 2020, he said, declining to disclose current or target amounts. It ended the year with 1.83 million subscribers and is targeting nearly 4 million by 2024.

"We realised that what we've accomplished so far, though extensive, is scratching the surface," Mr Sheikh said. "There's a lot more growth in the region and a lot more opportunity to come."

To fund its expansion, the six-year old company secured $25 million in debt financing from Abu Dhabi-based Ruya Partners, an independent alternative investment firm focused on private credit in developing markets.

"The primary purpose of this investment is to produce Arabic content and build awareness through marketing of our service in Gulf markets," Mr Sheikh said. "Going from 2million to 5 million subscribers in the next five years has to come from Arabic content."

Starzplay is working with Image Nation Abu Dhabi to produce its first original show and expects to start shooting the Arabic mini-series this year, following a delay due to the Covid-19 pandemic. Produced in the UAE with on-screen and behind-the-cameras talent mainly from the country, the pan-regional show will focus on folks tales from the UAE, Saudi Arabia, Oman and Morocco.

"Starzplay is our first investment in tech ... we take a view to understand the sector, positioning of the company in that sector and the management team executing the strategy,"  Rashid Siddiqi, co-founder and managing partner of Ruya Partners, said in an interview. "All of those boxes for Starzplay [score] very high marks."

While the streaming service platform serves the Middle East and North Africa region, the four key markets that fuelled its growth are the UAE, Saudi Arabia, Egypt and Morocco, which continue to be focus areas, Mr Sheikh said. Starzplay recently expanded its presence in Iraq and Libya with more locally-relevant content and intensified marketing.

Starzplay says it holds 32 per cent market share of the subscription video on demand (SVOD) services in the Mena region with ambitions to grow its geographic reach and subscriber base.

"We're very close to profitability and we're on a solid trajectory towards a successful IPO," Mr Sheikh said.

Under its current projections, the company expects to break even by the end of 2021 and to record its first full year of profitability in 2022, the executive said.

A listing is also on the cards, though he said it is too early to decide where the shares will be floated.

"We’ve set a roadmap for three years, if we maintain the current growth rate and profitability metrics," Mr Sheikh said.

The Covid-19 pandemic brought with it a surge of subscribers that subsequently ebbed before picking up in September, he said.

The executive pointed to two patterns of consumer behaviour changes during the pandemic, one temporary and the other more enduring.

At the start of the virus outbreak, movement restrictions that forced families to stay at home prompted them to seek out more entertainment options.

"In terms of consumption, we grew more in the six weeks between March and April than in the past six years from new and existing users," he said, noting that more people logged in per account and consumption increased by up to four-fold. "This is a temporary trend, this lift is not sustainable, and as the economy opens up and people venture out more, we expect this type of peak to level off."

The more enduring trend is the brand exposure that it gained during this period.

"What the pandemic did is it created organic demand for our service. There is no substitute for that. This is where I'm very excited about what the future holds for us," Mr Sheikh said. "Because what the last six months did for us, we couldn’t achieve with hundreds of thousands of dollars in ads."

Starzplay is not seeking further financing to back its growth in the next three to four years, as the $25m from Ruya Partners "gives plenty of growth capital and breathing room to proceed comfortably", he added.

Ruya Partners, based at Abu Dhabi Global Market, is a portfolio investment of Abu Dhabi Catalyst Partners, a joint venture between Mubadala Investment Company and Falcon Edge Capital.

"We evaluated the business model of Starzplay, which shows great promise for growth, especially with the rising popularity of SVOD in the region," Mirza Beg, co-founder and managing partner of Ruya Partners, said in a statement.

Starzplay, which was founded in 2015, has secured $125m in equity funding through Starz, a Lionsgate company, State Street Global Advisors and technology investment firms SEQ Capital Partners and Delta Partners.