Dubai: Government-controlled Saudi Telecom Co. will invest $100 million in Middle East-based ride-hailing app Careem Networks FZ, giving the four-year-old company a valuation of about $1 billion.

The board of STC, as the Saudi company is known, approved the purchase of a 10% stake in Dubai-based Careem on 15 December, according to a statement on the Saudi Stock Exchange on Sunday.

Saudi Telecom will fund the deal from internal resources.

The company is already an investor in Careem through its venture capital arm, STC Ventures, according to Careem’s website.

Careem has been working with Credit Suisse Group AG to raise as much as $500 million, people familiar with the matter said in September, adding that the company could be valued at more than $1 billion after the funding.

Careem raised $60 million last year from investors including buyout firm Abraaj Group to expand in the Middle East, Africa and Asia.

The investment is “in line with the company strategy to invest in the innovative digital world," STC said in the statement.

Saudi Arabia’s Public Investment Fund, which also holds a 70% stake in STC, invested $3.5 billion in San Francisco-based Uber in June.

Investors in Careem’s earlier funding rounds include Dubai-based Wamda Capital and Saudi Arabia’s Al Tayyar Travel Group.

More money is flowing into Middle Eastern technology start-ups as investors look to profit from the region’s high economic growth and smartphone penetration rates.

Online marketplace Souq.com was one of the first companies in the region to reach unicorn status—a technology start-up valued at $1 billion—with a fundraising round last year, people in the know told Bloomberg last March.

Amazon.com Inc. is in talks to buy the online retailer, people familiar with the matter told Bloomberg in November.

Careem, which started in 2012, operates 47 cities in Turkey, Pakistan and across the Middle East and North Africa, according to the STC statement.

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