Target Information

Salla, founded in 2016 in Makkah, is a prominent SaaS e-commerce enablement platform dedicated to supporting the entrepreneurial ecosystem in Saudi Arabia. Designed for small and medium-sized enterprises (SMEs) and aspiring entrepreneurs, Salla provides a proprietary solution that enables businesses to establish and manage their online storefronts efficiently. The platform has facilitated e-commerce sales worth $7 billion since 2020 and currently serves over 80,000 active merchants, tapping into a burgeoning $20 billion e-commerce market that is projected to grow by over 25% annually in the following years.

The company was co-founded by Nawaf Hariri and Salman Butt, and it has grown to employ more than 160 developers focused on technological advancements and product development. Salla’s offerings empower merchants to create an e-commerce website, accept online payments, and manage product shipping, all accomplished within a few hours. With over 400 integrated applications, Salla supports merchants throughout the various stages of operating an online business, ensuring a comprehensive e-commerce experience.

Industry Overview in Saudi Arabia

The e-commerce landscape in Saudi Arabia has witnessed significant growth, fueled by a rapid increase in internet penetration and a growing base of tech-savvy consumers. As the Kingdom undergoes a transformation agenda aimed at diversifying its economy and promoting entrepreneurship, e-commerce is positioned as a linchpin in achieving these goals. The Saudi government has placed substantial emphasis on enhancing digital infrastructure and supporting SMEs, seeing them as vital contributors to the economic landscape.

Over the past five years, the number of SMEs in Saudi Arabia has tripled, indicating a robust entrepreneurial drive within the Kingdom. The increasing adoption of digital solutions and e-commerce platforms is reshaping traditional business models, allowing ventures to thrive in a highly competitive market. Additionally, with a significant portion of the population being young and digitally inclined, the market is ripe for sustained e-commerce growth.

This growth potential has attracted both local and international investments, as stakeholders recognize the importance of technology in fostering scalability and operational efficiency. The ongoing efforts to enable an entrepreneurial ecosystem are evident through various initiatives aimed at providing funding, training, and resources to help small businesses flourish, making Saudi Arabia a focal point for e-commerce innovation in the region.

Rationale Behind the Deal

Investcorp’s $130 million investment in Salla represents a strategic move to capitalize on the burgeoning e-commerce sector in Saudi Arabia. As the Kingdom aims to foster innovation and entrepreneurship, supporting a company like Salla aligns with Investcorp’s vision of backing businesses capable of scaling and succeeding in public offerings. This investment not only provides the capital necessary for Salla to drive its growth trajectory but also positions Investcorp to leverage its market knowledge and connections to potentially facilitate future capital market access for Salla.

With a strong track record of generating best-in-class margins and a clear path toward expansion, Salla presents an attractive opportunity for Investcorp as they seek to diversify their portfolio with high-growth potential companies. By providing growth capital, Investcorp aims to support Salla in scaling its operations and enhancing its product offerings, thus solidifying its position as a market leader in the e-commerce enablement sector.

Information About the Investor

Investcorp is a global alternative investment firm known for its focus on providing high-quality investment opportunities across various sectors. Through its Investcorp Saudi Pre-IPO Growth Fund LP, the firm targets equity growth investments in promising companies primarily based in Saudi Arabia, encompassing industries such as business services, transport, logistics, and healthcare. The Fund is designed to help investors gain exposure to high-growth, market-leading businesses destined for capital market entry.

The leadership team at Investcorp, including Walid Majdalani, Head of Emerging Markets Private Equity, emphasizes the firm’s commitment to supporting innovation and entrepreneurship within Saudi Arabia. By forging strategic partnerships with companies like Salla, Investcorp not only enhances its investment portfolio but also plays a crucial role in driving the Kingdom’s economic diversification efforts.

View of Dealert

In assessing the investment in Salla, it is evident that this deal reflects a well-informed strategy from Investcorp. The significant growth potential of the Saudi e-commerce market, combined with Salla’s established track record, presents a compelling case for the investment's success. Given the increasing shift towards online retail and the demand for robust e-commerce platforms, Salla is poised for continued growth, making it a strategic acquisition for Investcorp.

Additionally, the alignment between Salla’s mission and Saudi Arabia’s broader economic objectives bodes well for the partnership. As the Kingdom continues to encourage digital entrepreneurship, investing in a platform that directly supports SMEs not only enhances Investcorp's reputation but also positions them strategically within a thriving sector.

Moreover, Salla's operational efficiencies and its ability to support a diverse range of merchants with integrated solutions present a strong business model. The ongoing commitment from both the co-founders and the investor community to innovate and adapt further solidifies the potential for a successful future IPO. Overall, the investment is not only sound from a financial perspective but also indicative of a thoughtful approach to scaling high-potential businesses in a rapidly evolving market.

View Original Article