MNT-Halan, a fintech startup based in Egypt, has announced that it has managed to raise $157.5 million in investment funds.
The mentioned startup belongs to the category of so-called unicorns. The corresponding category includes start-up companies whose market value exceeds the $1 billion mark. MNT-Halan specializes in providing consumers with services related to microfinance and payments. The startup announced its intention to use part of the raised money to implement the deal to acquire another fintech firm at an early stage, which is Tam Finans. The mentioned company, which in the foreseeable future is likely to enter the ownership structure of MNT-Halan, is based in Turkey. For an Egyptian startup, the implementation of the mentioned deal will mean expanding the scope of activities by launching a business in a new market. It is worth noting that Turkey as a commercial space is promising and capable of generating significant income.
Tam Finans specializes in financing micro-enterprises and small and medium-sized businesses. Currently, this company operates 39 branches, which are located in 26 cities across Turkey. Tam Finans also has a very ambitious goal, which is for its share in the Turkish financial services market to reach 40%.
Chief Executive Officer of MNT-Halan Mounir Nakhla says that the combined entity, which will be formed as part of the specified deal, will have a book portfolio worth just under $1 billion.
The exact financial terms of the deal are still unknown.
Actera, one of the largest private equity firms in Turkey, and the London-based European Bank for Reconstruction and Development (EBRD) jointly own Tam Finans MNT-Halan, and both will become shareholders of MNT-Halan.
The Egyptian fintech startup received new funding about 19 months after it managed to raise $400 million in equity and debt. MNT-Halan’s market value reached a significant $1 billion mark after one of its backers, Chimera Investments, acquired a 20% stake in the deal worth $200 million. The startup does not report on what level the mentioned indicator is currently at. At the same time, the company confirms that its market value exceeds $1 billion.
PitchBook data shows that over the entire time of its existence, Tam Finans has managed to raise more than $ 30 million. It is also known that most of the mentioned amount consists of debt obligations.
Mounir Nakhla, who is the co-founder of MNT-Halan along with Chief Technical Officer Ahmed Mohsen, said that negotiations on the acquisition of the Turkish fintech industry player began about 18 months ago. The Egyptian startup perceives the relevant intention in the context of its results in a practical plane as an opportunity to expand its existing business. The beginning of MNT-Halan’s presence in the Turkish market will be what can be described as a kind of scaling of the company’s professional biography.
Mounir Nakhla, during a conversation with media representatives, noted that Turkey is two hours away from Egypt, and has a GDP of about $1 trillion. Also, in the relevant context, he mentioned the large population of the mentioned country. According to the Turkish Statistical Institute, as of 2019, the mentioned figure was 83.15 million people.
Mounir Nakhla stated that his company sees a huge opportunity to benefit from the various products it builds in Egypt. In this context, the core product for the Neuron banking system, the backend system, the development of apps, and other services were mentioned. According to him, MNT-Halan plans to leverage the size of Tam Finans, distribution networks, management expertise, and financial potential to gain a foothold in the Turkish market and ensure a significant presence in the region.
As for the prospects of an Egyptian startup in a new geographical area, in this case, it should be noted the significant potential of involving new customers. Currently, more than 30% of the population in Turkey does not have access to banking services. Against the background of the corresponding state of affairs, a kind of space of opportunities is being formed for those companies that offer consumers services related to the category of financial technologies. After the economic crisis in Turkey, certain changes were recorded in the landscape of the financial solutions market. In this context, the most important feature of the altered reality in the mentioned market was the beginning of the activities of companies such as Tam Finans. Similar firms offer financing to unbanked segments of Turkey. The appropriate companies carry out activities in such areas as credit scoring, credit consolidation, and alternative lending.
The specialization of Tam Finans is invoice factoring. In this case, it means a form of alternative financing intended for micro-enterprises, and small and medium-sized businesses. The firm buys up businesses’ outstanding invoices in exchange for upfront cash. The company has developed a credit scoring system that provides it with the opportunity, through the use of digital technologies, to approve and disburse loans to over 20,000 active businesses. The loan portfolio of Tam Finans is about $300 million.
MNT-Halan has received a factoring license. The company plans to launch operations in the relevant market in the fourth quarter of 2024. In this case, the firm will complement its existing lending services for small and medium-sized businesses.
MNT-Halan claims that, as of today, it has disbursed loans of over $4.5 billion and has served more than 8 million customers in Egypt, including 5 million financial clients and 3 million borrowers. It is worth noting that in January 2023, the company announced the disbursement of loans worth $2 billion to 5 million consumers.
Mounir Nakhla, who positions his firm as the largest Egyptian lender for un-banked companies, said businesses access $1,000 worth of loans on average while paying a 25% annual interest.
For MNT-Halan, lending is the primary activity and the main source of revenue. At the same time, the company offers consumers several other products. These include prepaid cards, consumer finance, e-wallets, savings, payments, delivery of fast-moving consumer goods, e-commerce, and mobile POS payments.
In April, MNT-Halan launched a super app that combined all its services on one platform.
Mounir Nakhla shows enthusiasm for the development of a prepaid card product. The corresponding product provides users with the ability to access consumer finance limits in the app and make purchases with flexible payment options. According to him, the company has about 1.8 million app users every quarter and the card is the next big thing.
Mounir Nakhla also stated that MNT-Halan has issued over 130,000 cards since its launch four months ago and is currently issuing between 1,000 and 2,500 cards daily.
The startup in the public information space stated that its revenue in 2022 amounted to more than $300 million. The company does not provide more precise figures. According to preliminary data, the firm’s revenue for 2023 increased by 35% compared to the indicator recorded in 2022. For this result, the devaluation of the Egyptian pound did not become an obstacle. Mounir Nakhla stated that he expects the combined revenue of MNT-Halan and Tam Finans to range from $500 million to $600 million in 2024.
It is worth noting that the international expansion of a startup is already an ongoing process. In March, MNT-Halan acquired a microfinance bank in Pakistan. The company is also considering other potentially possible major moves as part of an international business expansion. The relevant activities will be facilitated by the finances received by the startup from investors, including DPI (Development Partners International), and Lorax Capital Partners, funds managed by Apis Partners LLP, Lunate, and GB Corp.
In January last year, MNT-Halan received a $40 million investment from the International Finance Corporation (IFC), which is one of the institutions of the World Bank. In total, as part of the round conducted at that time, the company raised more than $630 million in equity and debt.
As we have reported earlier, FinTech Tapi Raises $22 Million.
