A potential merger between Tabby and Tamara heralds a new era in the Middle East's BNPL landscape, marking the rise of regional unicorns that are poised to reshape the industry. Both companies have demonstrated remarkable success individually, driven by visionary leadership, innovative strategies, and robust financial backing.

By combining their resources, expertise, and market presence, Tabby and Tamara can unlock synergies that drive value creation for their customers, merchants, and stakeholders. In this article, we will explore the ascent of these two major BNPL players before delving into the conditions conducive to a potential merger and the myriad benefits it could entail.

Tabby & Tamara: the Rise of the Middle East’s Unicorns

Tabby and Tamara are shining examples of success in the Middle Eastern business landscape. Tabby, founded in 2019, has rapidly become a leader in the region's BNPL industry, boasting a valuation of $1.5 billion by December 2023. Similarly, Tamara, established in 2020, quickly became Saudi Arabia's inaugural unicorn.

Tabby’s Success: Guided by Founders, Backed by Investors, Fueled by Innovation

Established in 2019, Tabby stands out as the pioneering BNPL platform in the Middle East, marking a significant milestone in the region's financial landscape. By December 2023, Tabby emerged as one of the most esteemed startups in the region, boasting a remarkable valuation of $1.5 billion.

Behind this remarkable success story are two key individuals: Hosam Arab and Daniil Barkalov. Their vision, leadership, and innovative strategies have been instrumental in driving Tabby's growth and establishing it as a trailblazer in the Middle East's BNPL industry.

A Little Bit of History About Founders

Following his MBA graduation from the prestigious Harvard Business School in 2009, Hosam Arab embarked on a transformative journey back to the UAE. In 2011, he co-founded Namshi, a leading e-commerce platform specializing in apparel fashion brands. His visionary leadership contributed to Namshi's ascent, culminating in his appointment as CEO in 2018. After steering Namshi to greater heights for over a year, Hosam Arab embraced a new chapter of innovation and growth by co-founding Tabby in September 2019 (and serving as CEO), marking the beginning of an exciting new adventure.

Daniil Barkalov's trajectory commenced with obtaining his Master's degree from St. Petersburg State University's School of Management in 2011. He cultivated his expertise through diverse roles, including positions at Siemens Management Consulting and the Lamoda Group. Demonstrating exemplary leadership, Daniil served as the CEO of Revo Technologies, a BNPL platform operating across Poland, Romania, and Bulgaria. In September 2019, he joined forces with Hosam to establish a venture poised for significant prominence within the Middle East, setting the stage for what promises to be a substantial contribution to the region's business milieu. Today, Daniil serves as the COO of Tabby.

Tabby is Now a Success Story Backed by Prominent Global and Regional Investors

Leveraging its robust BNPL business model and promising trajectory, Tabby has captured the interest of investors worldwide. The company has successfully amassed a significant sum of $1.7 billion in funding across 13 rounds. Its latest financing milestone, a noteworthy pre-IPO Debt Financing round totaling $700 million, was secured on December 21, 2023, with JP Morgan leading the investment. Bolstered by support from 28 investors, Tabby counts among its recent backers prominent entities such as Saudi Venture Capital Company, UAE's Mubadala, Hassana Investment Company, Paypal Ventures, and Soros Capital Management - to name a few.

As of December 2023, Tabby proudly commanded a valuation of $1.5 billion, buoyed by its extensive user base surpassing 10 million individuals. The company has forged partnerships with over 30,000 global and regional brands, solidifying its position as a key player in the market. With operations across Saudi Arabia, UAE, and Kuwait, Tabby continues to establish itself as a leading force in the region's financial landscape.

Tamara: Pioneering Double-Digit Growth to Become Saudi Arabia's First Unicorn

Established in February 2020, Tamara swiftly ascended to become Saudi Arabia's first unicorn. Following a Series C funding round in December 2023, led by SNB Capital and Sanabil Investments, the company announced an impressive valuation of $1 billion. Also, the company secured one of the initial permits from the Saudi Central Bank (SAMA) to offer BNPL services, cementing its status as an innovator in the Saudi financial landscape.

A Tale of Triumph Shaped by the Founders’ Vision

Founded by three visionary Saudi co-founders—Abdulmajeed Alsukhan, Turki Bin Zarah, and Abdulmohsen Al Babtain, the company navigated its path to success with keen insight and strategic acumen. Particularly, Tamara’s current CEO Abdulmajeed Alsukhan holds a Master of Arts in Economic Policy from Boston University and a Bachelor of Arts in Financial Economics from California State University, Northridge. Before his current endeavors, Abdulmajeed co-founded Nana, a pioneering digital grocery shopping platform.

Operating in Saudi Arabia, UAE, and Kuwait, Tamara has over 10 million users, and more than 30,000 partner merchants. The Saudi unicorn secured over $955 million in funding from leading investors such as the Saudi National Bank, Sanabil, and Checkout.com. These substantial investments underscore the confidence these key players have in Tamara's vision and potential for growth. 

Why Tabby & Tamara Should Merge and What Are the Benefits?

Factors Highlighting the Imperative for a Tabby & Tamara Merger

In our latest article addressing the global landscape of the BNPL industry, we delved into its intricate challenges. These include:

• Heightened regulatory scrutiny across various jurisdictions, indicating a trend towards increased oversight of BNPL platforms.

• Profitability hurdles stemming from substantial operational costs such as marketing, administrative, and technology expenses.

• Research findings reveal that BNPL users, particularly among Gen Z individuals, exhibit higher levels of debt and lower credit scores compared to non-BNPL users.

• Emerging evidence suggests a propensity for overspending among BNPL users, driven by the allure of interest-free borrowing, which can exacerbate delinquency rates.

When applied to the Middle East, these challenges remain relevant, albeit with some necessary remarks:

• Regulatory scrutiny is also taking place in the Middle East. In December 2023, the Saudi Central Bank (SAMA) took a significant step by introducing regulations aimed at overseeing BNPL companies, reinforcing its pivotal role in supervising and managing these entities. Likewise, in December 2023, the UAE's Central Bank amended the Finance Companies Regulations to authorize BNPL companies to offer short-term credit services. This expansion permits entities to operate as agents of licensed Banks or Finance Companies, or as Restricted Licence Finance Companies, subject to approval by the CBUAE.

• In contrast to the United States and Europe, where many BNPL providers frequently operate at a loss, Tabby claims its profitability within the GCC region. Similarly, the CEO of Tamara stated in a 2022 announcement that the BNPL platform anticipates achieving profitability by 2023.

• Concerns over users' profiles and excessive spending should be mitigated through the recently introduced regulations that aim to protect customers and foster the development of a resilient and thriving industry.

This said, heightened regulatory scrutiny should translate for both Tabby and Tamara, among others, to reduced flexibility in revenue generation avenues, such as limits on credit, interest rates, penalties, and fees, alongside escalated costs associated with implementing organizational and operational processes and procedures necessary for BNPL players to adhere to these regulations.

How Tabby & Tamara Merger Would Benefit Both BNPL Players

A merger between Tabby and Tamara would yield numerous advantages, including:

1. The creation of a regional BNPL superpower whereby Tabby and Tamara would have market dominance, consolidating their market positions, and gaining a competitive edge over rivals. This strengthened market position enables them to command greater market share and influence industry trends.

2. Pooling resources and expertise would fuel accelerated growth opportunities, allowing the merged entity to pursue aggressive expansion plans and enter new markets. With access to a larger combined customer base and enhanced capabilities, Tabby and Tamara can capitalize on growth opportunities more effectively.

3. The merger would unlock strategic synergies between Tabby and Tamara such as eliminating duplicate costs, optimizing resources, enhancing the product portfolio, and catering to a broader range of customer needs and preferences. The merger would allow them to offer a wider array of financing options and tailored solutions to merchants and consumers alike.

4. By diversifying their operations and customer base, merged entities can reduce their exposure to market fluctuations and increased inflation, as well as mitigate risks associated with current economic downturns or regulatory changes.

5. The combined financial resources of Tabby and Tamara would enhance the new entity's financial strength, providing access to additional capital for investment and growth

6. By leveraging each other's technological capabilities, Tabby and Tamara can drive innovation and develop cutting-edge solutions to stay ahead of industry trends and meet evolving customer demands.

In summary, the merger between Tabby and Tamara represents not only a strategic business move but also a transformative opportunity to shape the future of BNPL in the Middle East. As they join forces to create a regional BNPL superpower, their combined strength and vision have the potential to propel them to even greater heights of success, setting a new standard of excellence for the industry as a whole.