Swvl Holdings Corp (Nasdaq: SWVL), a Cairo-founded technology-driven mobility company, has announced the pricing of a $4.7 million private placement to accelerate its expansion in high-value markets. The deal, which aligns with Nasdaq rules for at-the-market offerings, involves key investors, including members of Swvl’s board of directors. This strategic move reflects Swvl’s ambition to extend its reach into new territories, with a particular focus on the United States.
The placement, priced at $4.79 per share — the company’s closing price on November 15, 2024 — is set to close imminently, pending customary conditions. Participating investors have agreed to a six-month lock-up period, with gradual release restrictions thereafter. Swvl intends to channel the proceeds into working capital and operational expansion, particularly in regions with high growth potential, such as the U.S., where it seeks to capitalize on its AI-driven transportation solutions.
The announcement comes on the heels of promising news from Swvl’s home market, Egypt. The company recently secured $4.2 million in contracts spanning sectors such as FMCG, telecommunications, e-commerce, and banking. These deals underscore Swvl’s ability to address complex transportation challenges with its tailored Software-as-a-Service (SaaS) and fully managed mobility solutions.
Swvl has also made significant strides in Saudi Arabia, reporting a sixfold increase in gross profits for Q3 2024 and signing $2.6 million in new contracts across education, healthcare, and other industries. Leveraging AI-powered routing and real-time monitoring, the company has found success in optimizing student and workforce mobility.
However, despite these achievements, Swvl faces persistent questions about its financial health. While the company recorded a $3.1 million net profit in 2023 — a dramatic turnaround from a $123.6 million loss in 2022 — its reliance on one-off debt settlements and divestments raises concerns about the sustainability of its growth.
Further complicating matters, some U.S. law firms recently announced they were investigating potential securities fraud following allegations from Wolfpack Research, which claimed Swvl is nearing bankruptcy. The report cited operational disruptions, dwindling cash reserves, and customer dissatisfaction, particularly in its Cairo services.
Swvl’s stock has faced significant volatility in recent months. Following Wolfpack’s allegations, shares plunged by 43.62%, closing at $3.05 — a steep drop from its IPO price of $10 in 2022.
To counter these challenges, Swvl has taken bold steps to streamline operations, including divesting its European and Latin American businesses in 2023. These moves have provided some financial relief but have not yet established a consistent revenue model.
The company’s planned U.S. expansion, buoyed by the latest capital injection, is seen as a pivotal move. Analysts believe Swvl’s ability to adapt its AI-driven platform to meet U.S. market demands will be crucial in rebuilding investor confidence.
Swvl’s recent contract wins in Egypt and Saudi Arabia highlight its potential to thrive in diverse markets. However, its long-term success will depend on its ability to overcome financial, operational, and legal challenges. The coming months will be critical for Swvl as it seeks to secure its place in the competitive landscape of transportation-as-a-service.
Swvl’s journey also holds broader implications for African tech startups. As one of the region’s pioneer unicorns, its struggles and successes could shape investor sentiment toward emerging-market technology ventures.
With its $4.7 million private placement, Swvl has signaled its determination to press forward. Whether this funding will serve as a springboard for sustainable growth or a stopgap measure remains to be seen. The company’s next moves will undoubtedly be watched closely by investors and industry observers alike.