A definitive deal has been made between a US institutional investor and Swvl, a company that offers shared mobility services out of Dubai, for the purchase and sale of more than 12.1 million of its shares and other securities for a combined price of almost $20 million.
The series A warrants and series B warrants have been offered at a combined purchase price of $1.65 per share, pursuant to a private placement, the Nasdaq-listed company said in a statement on Wednesday.
Its shares were down 16 per cent at $1.54 per share at 10pm UAE time on Wednesday. Swvl’s share price has lost more than 84 per cent of its value since its market debut at $10 in March.
Warrants are a derivative that give the right, but not the obligation, to buy or sell equity at a certain price before their expiration date, according to Investopedia.
The series A warrants may purchase up to more than 12.1 million shares and the series B warrants may purchase up to nearly 6.07 million shares, the statement said.
Both the series A and the series B warrants will be exercisable immediately upon issuance and will expire five years and two years from the date of issuance, respectively.
“If, during their respective five-year and two-year terms, all the warrants are exercised for cash, based on the exercise price of $1.65 per share, the company will receive an additional $30m in gross proceeds,” Swvl said.
The closing of the private placement and sale of the securities is expected to occur by August 12, subject to customary closing conditions.
Alliance Global Partners is acting as the sole placement agent.
Swvl began trading on Nasdaq in the US in March after a merger with special-purpose acquisition company Queen’s Gambit Growth Capital.
Founded in 2017, it is the second Arab technology company to be listed on Nasdaq after music streaming platform Anghami, which was also floated through a Spac in February.
Swvl allows commuters to reserve seats on private buses operating on fixed routes and pay fares using its mobile app. It has intercity and intra-city buses and offers transport services to business and governments across more than 135 cities in more than 20 countries.
The company’s platform provides complimentary semi-private alternatives to public transport for individuals who cannot access or afford private options. Users can book their rides on an app with various payment options and 24/7 access to private buses and vans.
The company has been on a buying spree since last year, acquiring Spain’s Shotl, Argentina’s Viapool, Germany’s door2door and Turkey’s Volt Lines.
However, the company announced in May that it would cut headcount by 32 per cent as part of a plan to turn cash flow-positive in 2023.
“We needed to make sure we get to profitability soon with the cash flow we have and not rely on external access to capital in this environment,” Swvl’s chief financial officer Youssef Salem told The National last month.
The company expects its losses to widen to $90 million this year from $50m in 2021 before turning profitable next year.
Mr Salem said institutional shareholders, who make up 84 per cent of the total, have all voluntarily extended a lock-up for six months “because they believe in the long-term strategy” of the company.
“On the other hand, we do have 16 per cent free float, which is more sensitive and more vulnerable to market conditions”, he said.
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