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Pace of Gulf tech deals heats up as Emaar buys Namshi stake
[DUBAI] Emaar Malls will buy a 51 per cent stake in e-commerce fashion website Namshi from Global Fashion Group, a firm backed by Rocket Internet , for US$151 million, a sign of growing demand for tech deals in the Middle East.
The acquisition comes two months after Amazon agreed to buy Souq.com, showing how the Gulf region is embracing e-commerce, a market which global consultancy AT Kearney predicts will grow to US$20 billion by 2020.
"This is a sign of Emaar's ambition to enter the digital space," GFG's finance chief Nils Chrestin told journalists, adding the partnership should allow Namshi to add more fashion brands and potentially expand to more neighbouring countries.
Both Emaar and GFG said they had agreed to jointly develop the business until a possible listing or a full takeover.
The investment is also good news for e-commerce investor Rocket Internet, which has been under pressure since the valuation of GFG was slashed by two thirds last year during a fundraising round with Swedish investor Kinnevik.
Rocket's shares, which had risen on Tuesday in response to strong growth at its online food delivery firm Delivery Hero, were up another 4 per cent by 1018 GMT, making them the biggest gainer on the German small-cap index.
Namshi, which operates in the United Arab Emirates, Saudi Arabia, Qatar, Kuwait, Oman and Bahrain, is GFG's smallest business but the only one that has turned profitable.
Its sales rose a currency-neutral 8.5 percent in the first quarter to US$41.1 million.
Emaar will buy the stake in Namshi in an all-cash transaction, which is expected to close in three months.