NewsStartups & Ideas

SWVL is going public in new merger with all-female SPAC, Queen’s Gambit

SWVL, the transportation startup that’s been operating in Kenya for a while now, will be going public in a merger with the all-female Special Purpose Acquisition Company, Queen’s Gambit. The merger will allow SWVL to list on the Nasdaq stock exchange.

This makes SWVL the first Egyptian Startup to go public outside Egypt. And at a valuation of $1.5 Billion, this will be the biggest African unicorn debut at any US-listed exchange. Jumia’s was at $1.1 Billion.

Early this year, Queen’s Gambit Growth Capital raised $300 Million. In a statement on the merger, the CEO of Queen’s Gambit says she was looking to identify and grow a “disruptive platform that solves complex challenges and empowers underserved populations,” noting that in SWVL she found “each of those things and more.”

Founded in Egypt in 2017, SWVL has expanded to Kenya, Pakistan, Jordan and Saudi Arabia. They have their headquarters in Dubai.

Currently, SWVL does a lot more than offering in-city bus-hailing services. They have a couple of ride options including:

  1. Corporate Ride services
  2. Long distance commutes
  3. Carpooling

Before the pandemic, in Kenya, SWVL faced great resistance from the National Transport Safety Authority (NTSA) in terms of licensing. The vehicles used plus the drivers were forced to have Public Service Vehicle (PSV) licenses so as to be allowed on the roads.

From its piloting phase, to the official launch, SWVL had become very popular with Nairobi residents who commute to work everyday. The clean and comfortable buses, the digital way with which everything worked, plus the fact that the buses used different, and faster routes, while being secure and timed, gave SWVL a very huge user base in a very short period of time.

However, the back and forth with the government authority, SWVL’s rush to grow, which made them sign up the matatus they wanted to disrupt in effect changing the quality of the service, plus the lockdown brought up by the COVID-19 pandemic, all contributed to destroying the relationship SWVL had built with its users in Nairobi.

Though still in operation, a lot of the users who for a time swore by SWVL don’t use the service anymore. The routes have also reduced on the app. Yes, there are a lot of factors contributing to this, including the ongoing pandemic. Hopefully over time, we will see things change. Especially with the trust investors seem to have on the company – which has for a while been one of the best funded startups in Africa.

With the company going public, we can expect them to venture into more markets across the world. We can also expect better offerings in the countries the company already has presence.

According to information from the SPAC presentation, SWVL says in the year 2020, it made $26 million in annual gross revenue. This is with a negative EBITDA of $29 million, which means the company lost $29 million. With the planned expansion to more countries, the company says it aims to grow its annual gross revenue to $1 billion by 2025. That sounds a tad too ambitious given the cost of expansions and all other challenges expected in new countries.

SWVL’s idea and approach is very sound though. This was proved by just how ready and willing Kenyans were to switch when the company launched in the country. Most didn’t care about the green energy conversation, and reducing carbon footprint shenanigans startups often yap about. All they wanted was a comfortable, timely ride at an affordable price. The company should not lose sight of that in its expansion plans.

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