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The story behind the Diwanee deal

Lebanon’s first major tech and digital acquisition explained

by Livia Murray

Finally proving that it is possible to start up, scale and sell in the country, Lebanon saw its first major acquisition in the tech and digital sector a few weeks ago, as French digital publishing company Webedia acquired Diwanee, a Lebanese digital media company that specializes in content creation targeting women in the Middle East.

According to estimates published by regional startup news platform Wamda and a source contacted independently by Executive, the investment range is between $12 million and $16 million for a majority equity stake between 50 and 60 percent. The company’s valuation falls between $23 million and $33 million. The Diwanee team has not revealed any specific numbers, but admits that estimates are not far off.

Dream big

The team describes the acquisition as a small victory, after trying to secure large-scale funding for a long time. “From day one we had a pretty ambitious project. The difficulty of it was finding investors who understand what we are trying to do, and who are willing to take the risk,” says Herve Cuviliez, one of Diwanee’s co-founders.

Cuviliez cites the difficulty in finding good terms for investments in the Middle East, where venture capital firms (VCs) were largely reluctant to make an investment of the size they were asking for. “We wanted to find investors who understand what it takes to build a digital company at a regional level and how difficult and cash-intensive” it is, he says. “You don’t build something like Diwanee with one or two million dollars financing. You need much more.”

Throughout the course of the company’s existence before the acquisition, they had only been able to raise $6 million in financing. Their most recent round of funding came from a private placement in June worth $3.25 million dollars by MedSecurities Investment, a subsidiary of BankMed. Though they were unable to secure any funding from regional VCs, Cuviliez admits that out of all the people saying no, “you just need one to say yes.”

Seize the day

The deal was the result of a five-year-old connection that turned into an opportunity. A mutual friend first introduced Cuviliez and his wife and co-founder, Delphine Edde, to Guillaume Multrier, co-founder of Webedia, in 2009. Diwanee was only a few months old, and Edde and Cuviliez had just moved to Lebanon after having spent most of their professional lives in Paris, Cuviliez having been involved in the digital media scene since the mid-’90s. Over coffee they joked that Diwanee was the Webedia of the Middle East.

Four years later, the opportunity surfaced when Webedia was acquired by Fimalac Group, the French holding company for credit rating agency Fitch Rating. According to Cuviliez, Fimalac Group was looking to branch out into digital media when it acquired Webedia, which according to its CrunchBase profile was a deal worth 70 million euros. Cuviliez claims that the deal was made possible because of Webedia’s desire to expand and interest in the Middle Eastern market.

The Diwanee team jumped on the idea when Multrier reached out to them last July. In September, they drafted a joint proposal and by the end of November had reached a consensus. “Once we decided it made sense, it went very fast,” says Cuviliez. The acquisition was approved by Webedia’s board in mid-December, they did the due diligence in January, and closed the deal at the end of February.

“It was a very good match because we were looking for more than money,” says Cuviliez. The deal will permit Diwanee to improve its advertising and content management tools by benefiting from Webedia’s more sophisticated technology. “There are a lot of synergies now with Webedia, where we can both share the same tools, the same technologies, so this makes sense,” says Edde. Specifically, they are looking to improve the way content and advertising are paired to create personalized advertising based on behaviors of the site’s 5 million unique monthly visitors. Developing these technologies in-house, according to the co-founders, would have been much too costly.

Diwanee is seeking to expand within the Middle East, both through new countries and new vertical growth. As part of the deal, Webedia is injecting an additional $5 million in cash to grow the company. The Diwanee team did not disclose the projected internal rate of return, but Cuviliez says they expect to double in size over the next three years. Diwanee currently has about 130 employees, the majority of whom are based in Lebanon.

Diwanee’s acquisition is a success story that gives hope to Lebanese entrepreneurs, and one that they will no doubt try to replicate. Though by no means an easy process, the acquisition has shown what is possible for a Lebanese company to achieve. “If you are ambitious enough, it is doable for Lebanon,” says Cuviliez.

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Livia Murray

Livia covers business, finance and economic policy for Executive.

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