Saudi sovereign wealth fund launches Noon, Middle East’s take on Amazon

Alabbar, the Emirates’ sovereign wealth fund launched its very own e-commerce site this week. Emirati businessman Mohamed Alabbar is the brains behind the initiative, called Noon and expected to capitalise on the booming e-commerce market in the region.

Alabbar launched Sunday this e-commerce business with an initial investment of 1 billion dollars.

The new venture called “Noon” will offer 20 million products—ranging from fashion to electronics—to Middle Eastern households starting in January in a bid to create a homegrown version of e-commerce giants such as Amazon Inc. and Alibaba Group, reported local media over the weekend.

E-commerce accounts for just two percent of total retail sales in the region, worth around 3 billion dollars a year. With more young digital natives coming into the Middle East market, the e-commerce business in the region is set to reach 70 billion dollars by 2025, calculates the ‘Khaleej Times’.

Noon’s investors “saw a big opportunity” in the booming regional e-commerce market

"We saw a big opportunity here," said Alabbar at the launch announcement of Noon.com. The region’s largest online shopping platform will be based in Riyadh and initially operate from and focus on the U.A.E. and Saudi Arabia before expanding across a region where populations are growing, Internet penetration is expanding and disposable incomes rising.

“We need to turn the whole digital and e-commerce environment in the Middle East upside down,” Alabbar said to media at Noon’s presentation event. “We owe it to our region, it’s a fabulous environment,” he said. The initial investment will be used to set up the company’s supportive technology such as payment and delivery channels, warehouses and staff.

Initial 1 billion dollars investment

Mohamed Alabbar and several other Gulf-based investors are jointly contributing 500 million dollars to the company, while the rest of the equity comes from the Public Investment Fund, the Saudi sovereign-wealth fund that stands at the heart of the oil exporter’s economic reform plans.

Noon will be competing with Souq.com, another Middle Eastern online retailer which earlier this year raised 275 million dollars in funding from a group of international investors, including 50 million dollars from Standard Chartered’s private equity arm.

Looking ahead, Alabbar said Noon may consider a public listing after five to seven years from now. “We are in a rush to build a company, we’re not rushing to go public,” he further clarified in a press conference.

Image:Noon