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Investors Are Eyeing Middle East and Africa as the Next Frontier for Acquisitions

Report of Spotify eyeing Middle East-based streaming company Anghami is a sign of big investor interest in the regions.

For months, industry executives from Warner Music Group to Kobalt have been steadily beating a drum for investing in the Middle East and African markets.

On Thursday (Nov. 3), it it looked like the investor interest swirling around the region may be codified when Frankly magazine reported that Spotify was considering buying Anghami, the Arab-speaking world’s most popular streaming and content service. Billboard could not independently verify the report, however, and a source close to the situation refuted its contents. A Spotify spokesperson says the company has “no news to report regarding any potential acquisition.” Still, investment bankers say we are likely to see increasing investor interest and action around music assets in these markets, as song catalog prices remain elevated and the challenging macroeconomic outlook for North America and Europe slows down the pace of dealmaking there.


Financial players say that the dominant music streaming platforms and labels are looking to extend their global reach through popular streaming companies like Anghami in the Middle East and Boomplay and others in Africa because of those regions’ rapid growth, comparatively positive economic outlooks and the explosive potential for converting free subscribers to paid. 

Anghami CEO and co-founder Eddy Maroun declined to comment on the acqusition reports out Thursday, but in a late-September interview Maroun confirmed the company has been approached by interested parties in the past. 

“We believe what we are on to as an opportunity is big,” Maroun told Billboard at the time. “Until now we are independent, and we wish to remain independent as long as it’s in line with our company goals.” 

The Middle East and North Africa (MENA) was the fastest-growing region globally last year, with revenues up 35% to $89.5 million and a market that nearly doubled between 2019 and 2021, according to the International Federation of the Phonographic Industry (IFPI). More than 95% of MENA revenues came from streaming, and paid subscribership is expected to double by 2030. 

“This sends a very big message to every industry player that this is a hot region and that this is where growth is,” Maroun said in September. 

Launched in 2012, Anghami is the first and most popular streaming and content company focused on Arabic-language music, with about 58% of the Middle East’s market share and around 20 million active users, according to company filings.  

With investors including the Saudi Arabia-backed firm MBC Group and Middle East Venture Partners and partner Sony Music Entertainment Middle East, with whom Anghami launched a joint venture record label last year, Maroun and co-founder took Anghami public in February. 

After listing on the NASDAQ through a reverse merger with a special purpose acquisition company, Anghami stocks have fallen nearly 75% to $2.56 on the NASDAQ as of Thursday. Meanwhile, the company reported first-half 2022 revenues increased by almost 30% and monthly paid subscribers rose by 41% to 1.28 million. Bank sources described that growth as “encouraging,” and say that Anghami’s low stock price could make it an appealing acquisition for companies like Spotify.  

For its part, Anghami aims to diversify its business with an entertainment division that houses a content creation studio, runs Anghami’s record label, Vibe Music Arabia, and operates a chain of music venues and lounges, the first of which recently opened in Riyadh, Saudi Arabia.

In addition to MENA, music and streaming companies in Sub-Saharan Africa, where music revenues grew by 9.6% last year, are steadily gaining big industry investors.  

Major labels like Sony Music Group are adding staff to local offices in West Africa — where Sony previously had just two people — and Warner Music Group is leaning further into their strategy to acquire record labels and distribution companies in Africa, one of five priorities it pitched to investors during their 2020 IPO roadshow, say bankers familiar with the matter. 

“French copyrights and Latin American copyrights became popular a little earlier,” says Michael Ryan-Southern, Goldman Sachs’ global head of music and live entertainment investment banking. “Now we’re seeing more and more music coming out of these local territories and therefore [companies] need to invest to make sure they are capturing that funnel of new artists locally to exploit globally.” 

In its most recent Music In the Air report, Goldman Sachs analysts said Africa presents “a significant opportunity over time” and specifically highlighted Boomplay, one of the leading music streaming services, with 60 million monthly active users and a rapidly expanding song catalog. 

Sources say streaming services and other companies that provide infrastructure for music are currently more appealing investment opportunities than catalogs by popular artists in the region because investors fear those are less mature assets with unknown decay rates. 

Executives from Warner Music Group, Reservoir Media, Primary Wave, Kobalt and others have called out Africa and the MENA region in their emerging markets growth strategies in recent months. 

U.S.-based Reservoir Media is one of the most vocal companies about the opportunity it sees in the Middle East and Africa. With its partner, the United Arab Emirates-based independent music company PopArabia, Reservoir recently bought the Egyptian label 100COPIES, the Lebanese label and music publisher Voice of Beirut, and signed publishing deals with Egyptian rapper and singer Mohamed Ramadan, Lebanese indie singer songwriter Zeid Hamdan and Moroccan hip-hop star 7liwa.  

On a recent call with investors to discuss Reservoir’s earnings, the company’s founder and chief executive Golnar Khosrowshahi said emerging markets investments are a key part of the company’s diversification strategy. 

“The thing about the emerging markets is that we could do high-volume deals, but at significantly lower price tags than what we do in Europe … North America, etcetera.,” Khosrowshahi said. 

Outgoing Warner Music Group CEO Stephen Cooper said in September that Warner’s share in the Africa and MENA markets has grown from 10% to 30% in recent years through partnerships with record labels and distribution companies, and it aims to continuing investing in the region.  

“Great content, great entertainers, great storytelling is starting to transcend language, and there’s a recognition that the next global chart-topping songwriter can come from anywhere in the world,” says Aaron Siegel, Goldman Sachs global head of entertainment investment banking. “That is a theme that major labels and publishing companies are willing to bet on.”