UAE’s mega IPO bull wave will likely see another addition to its kitty. Cafu, UAE’s popular fuel delivery app, is in talks with Lazard Ltd for a possible IPO. The companies have not confirmed the exact details of the amount, the date, or even the actual possibility of the IPO. Cafu, owned by prominent Emirate tech entrepreneur Mr. Rashid Al Ghurair, launched its operations in 2018. For new entrants to the UAE and Gulf digital tech startup space, Cafu’s business model idea has served as a benchmark for best integrating and evolving traditional business models into the new online and digital tech space. Interestingly, for Lazard, which has recently opened its office in the UAE, the transaction’s success would mark its entry into the region, where its prolific competitors like Rothschild hugely dominate.
Cafu Doesn’t Charge Any Markup To Its Fuel Delivery Prices – How Does It Earn Money?
Interestingly, the app doesn’t charge extra markup for the fuel delivered to the customer’s home. The rates publicised equally match those of the current fuel pump rates. So, how does the company earn money, and what’s the business model? Initially, the app was introduced with only a fuel delivery service. The company did charge some basic delivery fees from 2018 till the start of the pandemic (bare slabs ranging from AED 10 to AED 20/delivery). Considering the pandemic-related calamity, the company had even waived all its delivery charges.
However, in its latest circular released a few days back, the company has informed that it will reintroduce delivery service charges as per the applicable slabs. The priority slab, which promises full delivery in 20 minutes, will be charged at AED 20/delivery. The standard delivery for waiting time ranges between 30 minutes and two hours, and the service will be charged at AED 16/delivery. In addition, for overnight orders placed between 12 midnight and 6 am, a service slab of AED 12/delivery order will be applied.
Apart from these revised slabs, the company has already earned revenue streams from multiple verticals introduced over the past few years. These include the battery, car wash, tyre change, engine oil replacement, and emergency rescue services.
The app also allows for third-party partner advertisement, a likely advertisement and loyalty-related revenue stream for the company.
Cafu – Latest Financials & Stats
There are no public records of the company’s customer count or latest financials. The markets still await clarity on whether the listing will occur and its latest financials.
Global Competitors
While Cafu is the leading fuel delivery operator in this region, globally, space is dominated by a couple of players. The latest market reports point to North America as the biggest market for this segment. The US is dominated by many apps, including Yoshi, Gaston, Ez Fill, Booster & Fuelster. Besides these startups, major American oil companies Shell and Mobil have also introduced their services in this segment.
Regarding the market size, there are varying reports on the current and expected market size in this segment. Average market estimates peg the current global market size in the $ 2.5 billion range. Estimates peg an average CAGR growth rate of 5 % over the next 7-year period.
