Cairo-born mass transport app Swvl is continuing its buying spree with the acquisition of Mexico-based transport firm Urbvan Mobility, giving the Nasdaq-listed startup access to the second most populated market in Latin America.
In an announcement last week, Swvl said it had reached an agreement to acquire the firm and expects the process to be finalized by the end of 3Q 2022. The acquisition is being done via a share-swap worth almost USD 28 mn based on Swvl’s current share price, Swvl CFO Youssef Salem told Enterprise.
The details: Urbvan shareholders will get 12 mn shares in Swvl over the next two years in return for their company, provided they deliver on the business plan, Salem said. The company didn’t disclose the price per share at which the swap was agreed. Swvl’s shares closed at USD 2.31 in New York at the end of last week.
About Urbvan: Founded in 2016, the bus transport app operates in 18 cities in Mexico, running regular urban and intercity routes as well as buses for private firms. The company has more than 450k registered users and has posted a compounded annual revenue growth rate of 138% since 2017.
The move is the latest in a string of acquisitions… Swvl has made four acquisitions so far this year and six to date as it continues to pursue global expansion. After acquiring Barcelona-based Shotl and Chile / Argentina-based Viapool last year, earlier this year the company bought Turkish firm Volt Lines, German SaaS platform Door2Door and the UK-based Zeelo.
…and announced major layoffs and operational cutbacks: The company slashed its headcount by a third in May in an attempt to keep it on track to become cash flow positive next year. It also imposed a hiring freeze, cut executive pay, and announced plans to scrap unprofitable routes.
Swvl has had a rough ride in the public markets: Swvl’s shares have plunged more than 75% since it debuted on the Nasdaq in April via a SPAC merger amid a broad sell-off on Wall Street of tech stocks and companies that went public via blank check firms.
The move is part of Swvl’s pivot toward its most profitable segments, transport as a service (TaaS) and software as a service (SaaS), it said in the statement. “Urbvan has high profit margins given relatively higher income levels in Mexico” compared with other Swvl markets, Salem told us.
A pause in all the M&A for now? The company hasn’t identified any specific firms it’s interested in acquiring next but will “continue to seek profitable targets who are open to all-share agreements,” Salem said.
