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.
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 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.
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.