Dubai-based shared mobility service provider Swvl has signed a definitive agreement with a US institutional investor for the purchase and sale of more than 12.1 million of its shares as well as securities for a total of almost $20 million.
The Series A warrants and Series B warrants were offered at a combined purchase price of $1.65 per share, in a private placement, the Nasdaq-listed company said Wednesday. in a press release.
Its shares were down 16% at $1.54 per share as of 10 p.m. UAE time on Wednesday. Swvl’s stock price has lost more than 84% of its value since entering the market at $10 in March.
Warrants are a derivative that gives the right, but not the obligation, to buy or sell stocks at a certain price before their expiration date, according to Investopedia.
Series A warrants can purchase up to more than 12.1 million shares and Series B warrants can purchase up to nearly 6.07 million shares, according to the release.
The Series A and Series B Warrants will be exercisable immediately upon issuance and will expire five years and two years respectively from the date of issuance.
“If, during their respective five-year and two-year terms, all Warrants are exercised for cash, based on the exercise price of $1.65 per share, the Company will receive additional gross proceeds of $30 million,” Swvl said.
The closing of the private placement and sale of securities is expected to occur by August 12, subject to customary closing conditions.
Alliance Global Partners acts as sole placement agent.
Swvl began trading on the Nasdaq in the United States in March after a merger with special purpose acquisition firm Queen’s Gambit Growth Capital.
Founded in 2017, it is the second Arab tech company to list on the Nasdaq after music streaming platform Anghami, which was also listed via a Spac in February.
Swvl allows commuters to book seats on private buses operating on fixed routes and pay fares using its mobile app. It has intercity and intracity buses and provides business and government transport services in over 135 cities in more than 20 countries.
The company’s platform offers free semi-private alternatives to public transport for people who cannot access or afford private options. Users can book their rides on an app with various payment options and 24/7 access to private buses and vans.
Since last year, the company has been booming with the acquisition of the Spanish Shotl, the Argentinian Viapool, the German door2door and the Turkish Volt Lines.
However, the company announced in May that it would cut its workforce by 32% as part of a plan to generate positive cash flow in 2023.
“We needed to make sure we were able to get to profitability quickly with the cash flow we have and not rely on external access to capital in this environment,” said Swvl chief financial officer Youssef Salem. The National last month.
The company expects its losses to rise to $90 million this year, from $50 million in 2021, before turning profitable next year.
Mr Salem said institutional shareholders, who make up 84% of the total, all voluntarily extended the six-month lockdown “because they believe in the long-term strategy” of the company.
“On the other hand, we have a 16% free float, which is more sensitive and more vulnerable to market conditions,” he said.
Updated: August 10, 2022, 6:28 p.m.