Kuwait's Alshaya invests in $1bn e-commerce platform Noon ahead of its launch

The franchise operator is the first retailer to announce a stake acquisition in Noon

Dubai,02,May, 2017:  Mohamed Alabbar , Chairman of Emaar Properties gesturtes during the media conference in Dubai.  ( Satish Kumar / The National ) 
ID No: 66719
Section: Business
Reporter:  Michael Fahy *** Local Caption ***  SK-Emaar-02052017-03.jpg
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MH Alshaya, the Kuwaiti franchise operator which is present across the Arab world, Turkey and Russia, bought a stake in e-commerce platform Noon. It is a US$1 billion joint venture between a group of investors led by UAE billionaire businessman Mohamed Alabbar and Saudi Arabia's Public Investment Fund and is expected to launch later this year.

Alshaya, whose franchises include Starbucks, Muji, Boots, The Cheesecake Factory and Victoria's Secret, is the first retailer to announce a partnership with Noon, which was supposed to launch in January with 20 million products. The e-commerce retailer has said it will launch operations "later this year", giving no further details.

The size of Alshaya's investment in the platform was not disclosed.

"We see great value in our partnership with Noon, which complements our existing online channels," said Mohammed Alshaya, the executive chairman of Alshaya.

"Our partnership with Noon will allow us to expand our customer base, reach new market segments, and participate in the next level of growth in regional e-commerce."

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The Kuwaiti company plans to sell fashion, health and beauty, and home and lifestyle brands from its international product portfolio on the platform. Noon announced last November that it had a warehouse the size of 60 football pitches in Dubai and a head office in Riyadh.

"Noon brings a new business model for e-commerce, developing a strong supply chain that benefits regional businesses," said Mr Alabbar, the founder of Noon. "We will work with the region's leading brands and retailers to help them grow their business through Noon."

Alshaya's investment is likely to heat up the e-commerce space, which is getting busy, particularly after Amazon.com bought regional e-commerce platform Souq.com for $580 million, making it the biggest foreign acquisition in a regional start-up.

Noon is not sitting on its laurels. This year it bought online market platform JadoPado for an undisclosed price. Emaar Malls, the retail unit of developer Emaar Properties whose chairman is Mr Alabbar, acquired a $151m stake in Dubai-based online fashion retailer Namshi, wrapping up its hunt to land a significant e-commerce asset, after it tried to buy Souq earlier this year.

Noon also appointed Faraz Khalid  the co-founder of Namshi as its new chief executive. Mr Khalid declined to provide any additional details when contacted by The National.

The e-commerce sector has been rapidly growing in the UAE thanks to the country's affluent and digitally savvy population. Mergers and acquisitions in the sector also picked up pace over the past year.  

There is a notable push by a number of home-grown brands to go beyond brick and mortar operations that have traditionally defined the retail landscape, with a pivot to develop the online shopping industry and directly challenge Amazon. And it is not just Noon that is stepping to the plate. According to Magnitt, an online start-up community, e-commerce comprised the lion's share of deals at 16 per cent investing in start-ups in the first half of the year, followed by technology at 13 per cent and Fintech at 10 per cent.