The Dubai daily deals website Cobone.com has been acquired by a New York-based investment firm that is believed to have made US$1 billion (Dh3.67bn) trading in Facebook.
Paul Kenny, the Irish founder and chief executive of Cobone, will retain the helm, while the rest of the executive team will also stay on to help grow its market share and support the company’s expansion in the Middle East.
The deal with Tiger Global Management is worth $20 million to $40m, Dow Jones reported yesterday.
“When we started Cobone we had much bigger ideas. I think we have been quite good at what we have done so far but we are only getting started,” said Mr Kenny. “We have a much bigger vision for the business.” The daily deals sector has ballooned across the region over the past two years, but the arrival of new players has been accompanied by fierce competition. LivingSocial was forced to shut up shop last August after operating in the market for just one year.
The 28-year old founder of Cobone described the negotiations to sell the company as a roller coaster ride.
“You have ups and downs, more downs than ups, to be honest, and just when you think you are at the end you are not at the end,” he said. “The process went on for a while and it was quite tiring, but I’m glad we now have a conclusion to it and we can focus on the business.” At one point the company was being courted by four potential buyers, said Mr Kenny, but it was important to Cobone that the successful bidder shared its view of the market.
“Tiger were definitely aligned with the management team decision of a long-term focus, so we are looking five years out,” said Mr Kenny. “Also, they have made a number of investments into emerging market companies in South America, in India and China, so they understand emerging markets and it was very important for us to have someone who is like that.”
Cobone, the largest daily deals site in the region, claims to have saved its 2 million customers almost $100m through coupons since it launched in 2010.
The company currently has a reach into every country in the region, but plans to expand its customer base further.
“Has the wave of e-commerce hit the Middle East? I would say no, I don’t think the wave has even started gaining momentum,” said Mr Kenny.
The company was founded with the backing of the Jabbar Internet Group, which has now exited the venture.
“This deal represents the international recognition of a highly successful local business. With Paul Kenny, we created a company that lead the way in regional group buying, and took on global players on our own turf,” said Samih Toukan, the chairman of Jabbar.
Tiger’s private funds focus on 10-year investments in the internet and technology sectors in companies including Facebook and LinkedIn.
Many lost money on Facebook’s IPO, but Tiger made a mint for its investors trading in the stock, according to Forbes.
On the eve of the IPO, Tiger’s investment funds owned almost 54 million Facebook shares, all of which it has now sold.
Forbes estimated that Tiger paid about $200m for the stock, but even if it paid double the price, the company still generated $1bn in profit for its investors.
“Globally deals websites are very popular. There has been a lot of success with online deals but locally there were a series of issues,” said Richard Adams, a director and senior consultant at Acuity Middle East.