Why Queen’s Gambit Plans to Take This Transport Startup Public in a $1.5 Billion Blank Check Deal

Victoria Grace views the bus-hailing app Swvl as more than just her first billion-dollar deal. Grace, the CEO of blank check company Queen’s Gambit Growth Capital, believes Swvl takes advantage of trends that present broader opportunities for investors in the travel sector.

“We understand the power of new marketplaces once the flywheel gets going, but Queen’s Gambit also has an ESG [Environmental, Social, and Governance] mandate,” Grace said. “We have all women around the table, and we see Swvl as being a catalyst for social good in travel in emerging markets.”

Queen’s Gambit, a special purpose acquisition company, or SPAC, plans to merge with Swvl. The combination would enable the Dubai-headquartered startup to list on the Nasdaq stock exchange at a fully diluted equity value of $1.5 billion. The listing is promised sometime before January — though many analysts expect it to take place within weeks.

Swvl is an asset-light company that aims to do for ground transportation what Oyo and Vacasa attempt to do for lodging with franchise-like models.

Swvl blends the novelty of reliable transport with the convenience of mobile booking in Egypt, Kenya, Pakistan, and seven other countries. The startup offers van service along fixed or semi-fixed routes, such as between a downtown hotel and an airport. It also lets customers reserve and pay for rides using an app. It plans to expand to 20 countries by 2025.

Grace, who is also the founder of venture firm Colle Capital, said that Swvl addresses several broader needs in emerging markets. It helps reduce carbon emissions and congestion in cities often snarled by traffic.

Social equity is also an aspiration. Women in many Middle Eastern countries struggle to travel unmolested. So Swvl pledges to offer safe rides in new or newish minivans and similar vehicles.

“In emerging markets, public transportation doesn’t exist or is extremely, extremely broken,” said Mostafa Kandil, founder and CEO of Swvl.

“If you’re a woman commuting in, say, Karachi, Cairo, or Mexico City, there is a probability you’re going to end up getting harassed,” Kandil said, adding that about half of his company’s student customer base is female.

Swvl competes with other companies offering similar services, such as Buser. Treepz, SafeBoda, Jatri, Chalo, and Urbvan. Swvl has acquired a controlling interest in Shotl, an on-demand shuttle platform in Europe, Latin America, and Asia Pacific. The merger will close by year-end, and will give Swvl a presence in 22 cities in 10 countries.

In the third quarter, Swvl reported the most impressive financial numbers among its rivals. It reported taking 9 million bookings that served 507,700 “active” users in the three-month period.

But profitability remained elusive. In its first market, Cairo, it had a negative 2.9 percent net margin during the third quarter.

“One of the main problems with public transportation systems is they’re rigid,” Kandil said. “They don’t really change as fast as the needs of cities change. They struggle to deliver on convenience, reliability, and affordability.”

Grace and Kandil believe there’s an opportunity to help megacities leapfrog by blending Uber-like technology with a fanchise-like management model of working with bus operators. Swvl faciliates financing for professional drivers to lease or buy new or newish vans. It also provides the routing technology to ensure on-time service at prices that work for both drivers and riders.

If a traffic snarl prevents a bus from showing up on time, Swvl has spare vehicles, called “ambulances,” parked and ready at key chokepoints in a city to deploy to add more buses and route around problems.

The company said it had generated income for approximately 17,000 drivers, and that, unlike some other companies, it provides female drivers with equal opportunities as males.

On the climate change front, Swvl claims it has saved about 245 million pounds of carbon dioxide emissions so far compared to how people would have otherwise traveled without it.

If Swvl achieves a market lead in multiple cities in multiple countries, its next step would be to provide service to international travelers looking to make local connections, such as from a hotel to an airport.

“The opportunity here worldwide is massive,” Grace said.