Swvl Holdings Corp (Nasdaq: SWVL), a Cairo-founded mobility solutions provider, has announced a sustainable credit facility agreement with HSBC Bank aimed at bolstering its financial position and supporting its expansion of enterprise contracts in the fourth quarter of 2024. This collaboration is set to extend beyond traditional financing, encompassing streamlined banking operations to enhance Swvl’s operational efficiency and cash flow management.
The deal with HSBC underscores Swvl ’s ongoing efforts to stabilize its financial footing and reposition itself as a key player in the mobility sector. “Our collaboration with HSBC is a key milestone in optimizing financial operations and boosting profitable growth,” remarked Mostafa Kandil, CEO of Swvl.
Swvl’s partnership with HSBC arrives at a critical juncture. The company, which has faced financial headwinds and operational restructuring in recent years, is seeking to leverage this facility to accelerate growth in high-potential markets.
The credit facility coincides with Swvl’s recently announced $4.7 million private placement to fund its expansion into the United States. The placement, involving key investors and board members, was priced at $4.79 per share — its Nasdaq closing price on November 15, 2024 — and includes a six-month lock-up period for participating investors. Proceeds will be directed toward working capital and scaling operations in high-value markets, particularly in the U.S., where Swvl aims to capitalize on its AI-powered transportation solutions.
Swvl has made notable strides in its core markets. In Egypt, the company recently secured $4.2 million in contracts across sectors such as FMCG, telecommunications, e-commerce, and banking. Meanwhile, in Saudi Arabia, Swvl reported a sixfold increase in gross profits during Q3 2024, alongside $2.6 million in new contracts within education, healthcare, and other industries.
Despite recent wins, Swvl’s financial health remains under scrutiny. While the company achieved a $3.1 million net profit in 2023, a sharp recovery from its $123.6 million loss in 2022, concerns persist over its reliance on one-off debt settlements and asset divestments.
Adding to its woes, allegations from Wolfpack Research earlier this year have intensified scrutiny. The short-seller claimed Swvl faces imminent bankruptcy. The report cited operational disruptions, cash flow concerns, and declining customer satisfaction in its Cairo services. These accusations triggered a 43.62% drop in Swvl’s stock price, which closed at $3.05 — a far cry from its $10 IPO price in 2022.
In response to financial pressures, Swvl has streamlined operations, including divesting its European and Latin American businesses in 2023. While these measures have alleviated short-term financial strain, analysts remain cautious about the sustainability of Swvl’s revenue model.
The company’s planned U.S. expansion, buoyed by the recent funding round, is viewed as a make-or-break opportunity. Industry analysts believe Swvl’s ability to adapt its AI-powered platform to U.S. market demands will be critical in rebuilding investor confidence and securing its long-term future.
Swvl’s journey reflects the broader challenges faced by African tech startups seeking to scale globally. As one of the region’s first unicorns, its trajectory could influence investor sentiment toward emerging-market technology ventures.
The coming months will be pivotal for Swvl as it works to navigate financial uncertainties, operational restructuring, and market expansion. While the credit facility with HSBC and recent private placement signal a renewed push for growth, whether these efforts will yield sustainable success remains uncertain.
For now, Swvl’s resilience amid mounting pressures positions it as a bellwether for the evolving dynamics of transportation-as-a-service in emerging markets. The stakes, both for the company and the broader ecosystem of African startups, could not be higher.