SoftBank Group Corp. has made its first investment in a company based in Saudi Arabia, partnering with a unit of the kingdom’s sovereign wealth fund to lead a $125 million financing for customer communication platform Unifonic.
Proceeds will be used to fund growth in the Middle East and expansion into Asia and Africa, Unifonic co-founder and Chief Executive Officer Ahmed Hamdan said in an interview. The company will also look at acquisitions in those regions to help it expand faster, he said.
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The Unifonic deal is funded through SoftBank’s Vision Fund 2, and follows on from July’s $415 million fundraising by Dubai-based cloud kitchen startup Kitopi, which was SoftBank’s first in a business based in the United Arab Emirates and took that company’s valuation past $1 billion. Last month, it also co-led a financing round for Turkish e-commerce company Trendyol.
SoftBank’s foray in the Middle East comes with a growing number of so-called unicorn businesses worth at least $1 billion. More investors from outside are looking to bet on a shift to online services that has lagged other regions.
Swvl, a Dubai-based provider of mass transit solutions, said in July it expects to list on Nasdaq in a combination with special-purpose acquisition company Queen’s Gambit Growth Capital, with an implied equity value of about $1.5 billion.
Unifonic provides cloud-based software to send automated messages. As the pandemic spread, businesses turned to these services to send one-time passwords or shipping updates to customers. The company processed 10 billion transactions last year, charging a small fee for every message it sends to customers.
Hamdan declined to comment on the latest valuation, but said the company is forecasting sales for the year of more than $100 million and will start planning a listing on a global exchange in the next three years.
“Being able to attract one of the top international funds to invest in Saudi Arabia is a big milestone that will encourage more foreign direct investment to come into the digital and technology space,” Hamdan said. “We will optimize to list on a global market that can provide the best valuation.”
Founded by Ahmed and his brother Hassan Hamdan in 2006, Unifonic was largely self-funded for the first decade. It raised $21 million in 2018 led by STV, a $500 million venture fund established by Saudi Telecom Co.
Sanabil, a unit of Saudi Arabia’s Public Investment Fund, was also an investor in the company. The PIF, as the wealth fund is known, put $45 billion into the first Vision Fund, which backed many of the largest technology startups including Uber Technologies Inc., Opendoor Technologies Inc. and DoorDash Inc.
“Over the next five years, we see the business growing by 10 times,” Hamdan said. “So we could process 100 billion transactions, impact 400 million people, and potentially be working with 50,000 companies.”
The valuation of Twilio Inc., which operates a similar business and is listed on the New York Stock Exchange, has more than tripled to almost $60 billion since the pandemic forced more transactions to move online.