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Thursday, 9 September 2021

MNT-Halan announces blockbuster USD 120 mn fintech round

MNT-Halan has closed what we believe is the largest fintech round ever to take place in MENA, raising c. USD 120 mn from a group of investors that includes financial services-focused PE house Apis, the UK’s Development Partners International (DPI) and Lorax Capital Partners, the group said in a statement. The funds will be used to help the company roll out new products, sharply grow its user base, and expand into new markets outside of Egypt. The story is getting plenty of digital ink this morning everywhere from Reuters to TechCrunch.

The company currently has 1 mn monthly active users and serves over 4 mn clients, 1.8 mn of whom are borrowers. MNT-Halan has disbursed more than USD 1.7 bn worth of loans and has a monthly throughput of USD 100 mn.

The size of the round underscores investor confidence in Egypt, Halan founder and CEO Mounir Nakhla told us yesterday. “These negotiations started pre-covid, continued during covid and finally closed with the post-covid era in sight. Bringing in this suite of global investors with a focus on fintech and emerging markets shows enormous trust not only in our company, our team and the strategy MNT-Halan is rolling out in the market, but also in Egypt as an investment destination.”

Halan aims to grow its user base 10x in the coming years — and to expand into both African and select Asian markets, Nakhla said. “Our target countries all have large populations and underbanked populations. Since well before the 18 months it took us to put this transaction together, we’ve been building tech assets that are now starting to come to market. We’re building a digital financial ecosystem for merchants and customers that are usually unbanked, offering lending, payments, BNPL and and e-commerce platform support by a whole logistics operation.”

Halan already acquired 100% of Raseedy, the first independent and interoperable digital wallet in Egypt licensed by the Central Bank of Egypt. It has also obtained micro, consumer and nano finance licenses from the Financial Regulatory Authority.

By our math, the transaction makes MNT-Halan the most-funded fintech player in the Arab world, a title previously held by Tabby in the UAE, which has raised a total of USD 132 mn after a USD 50 mn round. MNT-Halan is also backed by several venture capital firms including Algebra Ventures, DisrupTech, Endeavor Catalyst, Egypt Ventures, MEVP and Wamda. (Hit the statement above for a full list of the company’s investors.)

Global investors in this round say they’re attracted to Egypt by the size of the nation’s market — and the vast potential presented by >100 mn under- and / or un-banked people. Halan is the first investment in Egypt for Apis, a specialist financial services private equity house that manages or advises on total committed capital from investors of USD 1.2 bn.

What led Apis to buy in? MNT-Halan is a fintech player with a great management team, Abou Moussa told us, adding that Egypt “is a big economy, with a large population, a high and growing smartphone penetration rate, a digitalizing economy — yet, one that is still substantially under-banked. These growth drivers are complemented by the Egyptian government’s and regulators’ support for financial inclusion and digitalization of the economy,” Apis Partner Hossam Abou Moussa told us.

Halan is also attracting repeat investment: This is the second time that DPI, a leading UK-based investor in Egypt, has backed Nakhla. “We’ve been invested with Mounir and his team since 2018 and they’ve delivered fantastic results,” DPI Principal Ziad Abaza told Enterprise yesterday. “The transformation and growth of the company is what led us to reinvest with MNT-Halan in this round with our new fund. The fundamentals of the Egyptian market continue to support the growth of this fantastic fintech story and ecosystem the MNT-Halan team are creating. Their target market is under penetrated, from loans to payment solutions, and we really like the trajectory we see unfolding in the coming years. Egypt is a key market for DPI,” he said. The firm has total AUM of USD 2 bn across three funds. Together with its investors, it has deployed more than USD 350 mn in Egypt over the past five years

Digital financial services has been taking Egypt by storm, and investors have been taking note: Moneyfellows, which has digitized the concept of ‘Gameya’ had raised around USD 7 mn as of earlier this year and it is eyeing MENA expansion, while e-payment platform Fawry became the first Egyptian tech company to achieve a USD 1 bn market cap last year.

The regional fintech sector has seen significant growth over the past two years, last year the sector saw a major increase in demand, attributed to the pandemic, with 63 VC outfits investing in mobile and online payment solutions in the MENA region. Egypt, along with the UAE and Saudi Arabia, led the boom in e-commerce in the region last year, which subsequently led to growth in the delivery and online payment sectors, with fintech investments across the MENA more than doubling to USD 78 mn in 2020.

MEANWHILE- Apis has made good on its March 2021 promise to have a presence in Cairo. “We are also increasing our on-the-ground presence with new investment professionals joining the Apis team. We continue to be excited by the market opportunity in the Egyptian financial services sector and looking forward to using our global and EM financial services investing expertise to add value to and support Egyptian fintech businesses,” Abou Moussa said.

ADVISORS- White & Case, Freshfields, Lexence, and Mattouk Bassiouny & Hennawy served as legal advisors on the transaction.

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