Dubai transport start-up Swvl sees more customers ditch cars for buses

Swvl Holdings

18/07/2022 12:16

By Hadeel Al Sayegh
    DUBAI, July 18 (Reuters) - Higher oil prices have helped
Dubai-based transport startup Swvl attract customers as people
in its bigger markets such as Egypt and Pakistan ditch their
cars in favour of buses, Chief Financial Officer Youssef Salem
told Reuters. 
    The Nasdaq-listed company has however aggressively cut costs
and put some business expansion plans on hold as it steers a
path towards profitability next year to appease investors in the
wake of higher inflation and interest rates.
    "For us, there's two major impacts from the oil price and
inflation. One, very positive operationally, and one very
challenging from a capital markets perspective," Salem said in
an interview.
    Bookings have increased 40% year on year in the first
quarter as commuters park their cars and take a Swvl, he said.
    But the company slashed its headcount by almost a third in
May while scaling back expansion in its consumer business in
Jordan, Kenya and Argentina. Swvl has also raised fares between
10% and 20% in the last 4 months to keep up with higher
commodity prices, he said. 
    Swvl operates a ride-hailing platform for private buses,
similar to Uber's model for taxis, offering more flexible
schedules and routes than public transportation while catering
to individuals, businesses and schools.
    The company went public in April after a merger with
all-female backed special purpose acquisition company (SPAC)
Queen's Gambit Growth Capital, which valued Swvl about $1.2
billion. 
    But its share price has lost more than 75% of its value
since with many technology companies and cryptocurrencies faring
badly in the market turmoil leading up to recent interest rate
hikes.  urn:newsml:reuters.com:*:nL5N2X38GA
    Higher yields dull the allure of companies in technology and
other high-growth sectors, where cash flows are often heavily
weighted in the future and are reduced when discounted at higher
rates.
    Salem said investor requirements in the current environment
are clear, including free cash flow and shorter time horizons,
and have changed the game for technology firms which have
traditionally been enjoyed longer time horizons.
    "As the cost of borrowing increases, the capital available
for high growth stocks like ourselves becomes more limited and
expensive," he said.
     "If any market will not be profitable by 2023, we need to
shut it down now and re-launch it in 2023 rather than use
additional capital from the market."
    

 (Reporting by Hadeel Al Sayegh; Editing by Kirsten Donovan)
 ((Hadeel.AlSayegh@thomsonreuters.com; +971566883310;))