SWVL Terminates $100M Acquisition of U.K’s Zeelo: The Spotlight On Both Mobility Firms and their Plans Going Forward
Swvl, an Egyptian-born startup that provides shared mobility services for intercity and intra-city trips, has terminated its acquisition deal with Zeloo, a UK-based B2B smart bus operator, according to a statement issued by the company on Friday.
The Dubai-based company went public through a SPAC in April of this year and announced its agreement to acquire Zeelo for what is now believed to be in the region of $100 million.
However, Zeelo has announced that the acquisition has been canceled, citing general market conditions and the obvious slump in tech stocks. SWVL shares, for example, were trading at $10 per share when the deal was announced in April, but have since dropped to close at $1 per share.
The April 28 acquisition was supposed to close on May 24, but “due to financial market volatility, Swvl and Zeelo mutually agreed to terminate the planned transaction,” according to Zeelo.
Similarly, Swvl Holdings Corp says in an SEC filing that it has agreed to terminate their previously announced transaction in which Swvl would acquire Zeelo. Swvl previously provided funding to Zeelo in the form of a $5 million convertible promissory note, which the UK mobility company will now keep.
Spotlighting Zeelo and its plans going forward
Zeelo, which has raised $19.6 million to date, claims to have seen continued growth in its business in the United Kingdom, South Africa, and the United States, where it provides private rides for corporate and education commuters and students.
In an interview with TechCrunch, Sam Ryan, co-founder and CEO of Zeerlo, responded to the question of whether the termination of the acquisition was a disaster for Zeerlo by saying, “No, I don’t think it’s been a disaster.” “I believe market conditions have shifted. We’re still in a great spot, and the business is expanding at a breakneck pace. And, you know, we’re now immune to what’s going on in the public markets.”
The CEO says that both companies mutually agreed to terminate the transaction due to the collapse in tech markets: “The deal that was agreed no longer made sense right for the parties…not just in terms of the transaction, but also in terms of the growth opportunity…We wouldn’t be able to do any of that anymore.”
“We’re in a great place now. In the U.K, we are profitable and growing 1.5x again this year. We’re doing 150,000 rides per month via EV. This is growing very quickly, as there is a big opportunity in the U.S. market. I think being somewhat shielded from the public markets isn’t a bad thing. Any process like this involves lots of ups and downs and it’s a real roller coaster. But everyone is very, very excited about what’s next,” said Ryan.
Acknowledging the tech downturn, he added: “I think that the world has changed incredibly quickly in the last few months, and sentiment around public early-stage technology companies has changed dramatically. I’m not sure any of us could have foreseen what was going to happen over the last few months or just how severe it’s been.”
Zeelo Secures Partnership Deal with Zenobe
On a lighter note, Zeelo has announced a partnership with Zenobe, an electric fleet, and network infrastructure provider, to enable the latter to run rides on electric vehicles, thereby contributing to its net-zero goals. (Zeelo claims that its journeys are already carbon neutral due to collaboration with Climate Partner to support environmental regeneration programs in Bulgaria and Uganda.)
The fleet provider claims to service 25% of the UK bus market, providing charging infrastructure, battery replacement, large-scale battery storage, and refurbished second-life batteries. Zeelo already operates electric buses on some routes in collaboration with its bus operator partners.
“We believe access is the key roadblock to transitioning to electrification, which is why we have developed software, infrastructure, and a financing model together with our partners like Zeelo to build sustainability right into the business model of the transport industry,” said James Basden, co-founder of Zenobe.
Its transportation management software system consists of a SaaS platform and consumer apps that pick up workers or students from their current location.
Sam Ryan, Barney Williams, and Daniel Ruiz founded it in 2016 and closed its Series A round in 2018. It has so far raised more than $30 million from investors such as ETF Partners, InMotion Ventures, and Dynamo. In 2014, the co-founders sold their pioneering ride-sharing app JumpIn to Addison Lee.
The Spotlight on SWVL
Founded in 2017 by Mostafa Kandil, Ahmed Sabbah, and Mahmoud Nouh, SWVL provides tech-enabled mass transit solutions, offering intercity, intracity, B2B, and B2G transportation products and services. Swvl operates in 135 cities across 20 countries in Latin America, Europe, Africa, and Asia.
The mobility firm has acquired five global startups since its inception, in addition to this failed bid to add Zeelo to its ranks. Urbvan, a Mexican mass transportation company, is the most recent addition to its acquisition spree.
In late May this year, SWVl laid off 30% of its staff in an attempt to attain profitability by 2023. A month later, it ceased operations in Kenya and Pakistan, as well as suspended some routes in Egypt.
Egypt’s SWVL Partners Kuwait’s City Group Co. KSCP to Deliver the Best Mobility Platform in the country
SWVL has signed a strategic agreement with City Group Co. KSCP (“City Group”), a leading transport operator and provider of warehouse services in Kuwait, to use Swvl’s Software as a Service (“SaaS”) products. Swvl and City Group will work together to provide the best mobility platform for Kuwaitis, making their lives easier. The platform will provide on-demand, door-to-door, ride-hailing, ride-sharing, network buses, and school and corporate solutions.
The two partners will first focus on developing a “Citylink Shuttle” launch program. The program will include demand responsive transportation (“DRT”) and other preferred services, with plans to expand to 100 or more cars in the next six months. Following the successful completion of these phases, Swvl and City Group plan to launch a comprehensive platform onboarding of City Group’s remaining vehicles over a mutually agreed-upon time frame.
SWVL CEO’s Take on the New Partnership
Commenting on the partnership, Mostafa Kandil, Swvl Founder and CEO, said “We are excited to partner with City Group to bring the next generation of transportation solutions to Kuwait.” He stressed their commitment to the Kuwaiti transport sector and believe that collectively, they will have the unique ability to transform the current offering and customer experience for the benefit of the country’s daily passengers. “In the process, we will make mobility more reliable, affordable, and convenient,” he added.
“This partnership is another great example of how Swvl is leveraging strong and rapidly accelerating demand for its SaaS and B2G offerings, in turn facilitating expansion into new, attractive markets. We continue to demonstrate tremendous progress against our business plan goals. This SaaS partnership demonstrates the substantial synergies from our recent acquisitions of a controlling stake in Shotl and door2door, both leading SaaS platforms in Europe,” the CEO concluded.