MNT-Halan, an Egyptian financial technology company, has secured $157.5 million in funding and acquired a Turkish fintech firm to expand its market presence
MNT-Halan, a fintech unicorn based in Egypt, is engaged in a consolidation campaign. The microfinance and payments startup has secured $157.5 million in financing, which it is utilizing to partially finance the acquisition of Tam Finans, another fintech company, to expand into Turkey.
Tam Finans offers financing to small and medium-sized enterprises (SMEs). It presently maintains a 40% market share in Turkey and operates 39 branches in 26 cities.
According to Mounir Nakhla, CEO of MNT-Halan, the combined entity that emerges from this transaction will possess a loan book of “slightly less than $1 billion.”
Source: TechCabal
Tam Finans MNT-Halan is jointly owned by Actera, one of Turkey’s largest private equity firms, and the London-based European Bank for Reconstruction and Development (EBRD).
The exact financial terms of the deal were not disclosed, but one component of the deal was in shares. Both parties will become shareholders in MNT-Halan.
This most recent funding comes approximately 19 months after MNT-Halan raised $400 million in equity and debt, valued at $1 billion, after one of its investors, Chimera Investments, acquired a 20% stake for $200 million.
MNT-Halan is not disclosing its precise valuation in this most recent round, except to mention that it has now exceeded $1 billion. According to PitchBook, Tam Finans has raised more than $30 million since its inception, primarily through debt.
Nakhla, who co-founded the firm with CTO Ahmed Mohsen, stated in an interview with TechCrunch that his company initiated discussions with Tam Finans approximately 18 months ago. “A great entry into the Turkish market,” the Egyptian fintech perceived it as a counterpart for expanding its existing business.
“Turkey is a nation situated just two hours away from Egypt, has a GDP that is in the range of one trillion dollars, and has a substantial population,” he continued. “We perceive a substantial opportunity to leverage the diverse products we have developed in Egypt.”
He stated that this encompasses its primary banking system product, Neuron, as well as its backend system, app development, and other services. “We plan to establish a substantial and robust presence in Turkey by capitalizing on Tam Finans’ financial potential, management expertise, distribution networks, and size.”
Additionally, there are opportunities to acquire new consumers and upsell existing ones. The fact that over 30% of Turkey’s population is still unbanked has presented a significant opportunity for numerous fintech entrepreneurs.
Several fintech companies, such as Tam Finans, have emerged in Turkey to provide financing to unbanked segments since the economic crisis in 2018. These companies operate in the credit scoring, consolidation, and alternative lending domains.
Tam Finans specializes in “invoice factoring,” a type of alternative financing designed for micro, small, and medium-sized enterprises (MSMEs). In this process, Tam Finans acquires businesses’ outstanding invoices in exchange for upfront cash.
The organization has established a credit scoring system that enables it to digitally approve and disburse loans to more than 20,000 active enterprises. In total, it maintains a loan portfolio of approximately $300 million.
To augment its small and micro-business lending operation, MNT-Halan has recently acquired a factoring license and intends to enter the market in Q4 2024.
MNT-Halan has claimed to have disbursed over $4.5 billion in loans and served over 7 million customers in Egypt (5 million financial clients and 3 million borrowers) thus far. This represents a significant increase from the $2 billion in loans disbursed to 5 million customers last January.
At that time, Nakhla, which identifies itself as Egypt’s largest lender to the unbanked, stated that enterprises obtain an average of $1,000 in loans while paying a 25% annual interest rate.
MNT-Halan’s primary business and primary revenue generator is lending; however, it also offers a variety of other products, such as consumer finance, prepaid cards, e-wallets, savings, payments, e-commerce, FMCG delivery (through an acquisition), and mobile POS payments.
These products are all integrated into the larger lending operation.
In April of this year, it introduced a comprehensive application consolidating all these services. Nakhla is most enthusiastic about expanding the prepaid card product, which enables users to make purchases with flexible payment options and access consumer finance limits on the app.
“Nubank is a source of inspiration,” he stated. “The card is the next big thing, and we have approximately 1.8 million app users every quarter.”
According to Nakhla, MNT-Halan has distributed more than 130,000 cards since its inception four months ago and is currently issuing between 1,000 and 2,500 cards daily.
The fintech company asserted that it generated more than $300 million in revenue in 2022. Although it does not provide the most recent figures, revenues have increased by 35% yearly since then.
They are expected to continue to grow (in dollar terms) this year despite the significant devaluation of the Egyptian pound.
“We anticipate that the combined entities will generate revenues ranging from $500 million to $600 million in 2024,” stated Nakhla.
According to Nakhla, MNT-Halan is “exploring other big moves” and has acquired Tam Finans in Pakistan, following its expansion into the country in March, when it acquired a microfinance bank.
These steps will be facilitated by the growth investment raised from existing investors, including DPI (Development Partners International), Lorax Capital Partners, funds managed by Apis Partners LLP, Lunate, and GB Corp.
The investment also includes $40 million from the IFC, which the World Bank subsidiary disclosed it was investing in the company last January. MNT-Halan has secured more than $630 million in equity and debt due to this round.
