Egypt’s MNT-Halan Secures $157.5 Million Funding and Acquires a Turkish Fintech to Broaden Its Expansion

MNT-Halan, an innovative fintech firm from Egypt renowned for breaking new ground in the microfinance and payment sectors, has successfully garnered $157.5 million in capital. This fresh influx of funds is poised to support its strategic acquisition of the fintech enterprise Tam Finans, marking MNT-Halan’s ambitious entry into the Turkish financial landscape.

Tam Finans, known for offering crucial financial support to micro-enterprises and SMEs, boasts an expansive operational footprint with 39 branches across 26 Turkish cities and commands a significant 40% slice of the nation’s market share. With this merger, the new conglomerate anticipates managing a commendable loan portfolio just shy of $1 billion, as shared by MNT-Halan’s CEO, Mounir Nakhla.

While the specific financial intricacies of this transaction remain confidential, one crucial aspect of the agreement involved equity stakes. Actera, Turkey’s premiere private equity entity, together with the European Bank for Reconstruction and Development (EBRD) based in London and previously co-owners of Tam Finans, will transition to become esteemed shareholders in MNT-Halan.

This financial injection trails a notable $400 million capital raise approximately 19 months prior, catapulting the company’s valuation to a remarkable $1 billion, following a substantial investment from Chimera Investments for a 20% equity stake.

Currently, MNT-Halan has opted to keep its valuation metrics under wraps, merely indicating a valuation north of $1 billion. For its part, Tam Finans had successfully raised over $30 million, primarily via debt instruments, as per the financial dataset provider PitchBook.

In a dialogue with TechCrunch, Nakhla, alongside cofounder and CTO Ahmed Mohsen, revealed that conversations with Tam Finans began around 18 months ago, viewing Tam Finans as the perfect partner to penetrate the Turkish market — a strategy considered vital given Turkey’s substantial GDP and populous demographic.

Nakhla is particularly bullish about leveraging the myriad of innovations crafted in Egypt, such as its proprietary core banking system, Neuron, among other technological assets, to solidify a significant market presence in Turkey through Tam Finans’ established network and expertise.

The strategy also hinges on addressing the needs of over 30% of Turkey’s unbanked population, a demographic seen as ripe for the kind of financial solutions MNT-Halan specializes in. Since the 2018 economic downturn, Turkey has witnessed a surge in fintech startups catering to unbanked communities, with Tam Finans standing out with its “invoice factoring” service, aimed at bolstering micro to medium-size businesses by providing immediate liquidity against outstanding invoices.

MNT-Halan, having recently secured a factoring license, intends to embark on a similar venture by the fourth quarter of 2024, enhancing its portfolio of financial offerings to small and micro-businesses.

To date, MNT-Halan takes pride in having distributed over $4.5 billion in loans to a combined client base exceeding 7 million in Egypt alone, showcasing a notable increase from $2 billion in loans to 5 million clients recorded the previous January. According to Nakhla, these loans primarily assist businesses in navigating financial hurdles, with an average loan size of $1,000 at a 25% annual interest rate.

Beyond its primary lending operations, MNT-Halan’s product suite encompasses a diversity of services ranging from consumer finance, prepaid cards, e-wallet solutions, to more sophisticated offerings like e-commerce and mobile POS payments, all designed to support and enrich its core lending business.

This April showcased the launch of a comprehensive super app by MNT-Halan, aimed at consolidating its diverse services for enhanced customer accessibility. Nakhla is especially excited about the traction of the prepaid card offering, reflecting consumer finance dynamics directly within the app, facilitating a seamless shopping experience with versatile payment options.

Drawing inspiration from Nubank, Nakhla emphasizes the significant engagement on the app, noting a quarterly user base of about 1.8 million, with the prepaid card emerging as a central feature of their offerings.

Since its inception four months ago, MNT-Halan has rapidly expanded its card issuance program, achieving a milestone of over 130,000 cards, with daily issuances between 1,000 to 2,500 cards. Reflecting on the financial aspect, the company has registered revenues surpassing $300 million in 2022, with expectations of maintaining a 35% growth trajectory despite the challenges posed by the Egyptian pound’s devaluation, projecting revenues between $500-600 million by 2024.

The acquisition of Tam Finans is a strategic move following MNT-Halan’s entry into Pakistan earlier this March through a microfinance bank acquisition, as the company sets its sights on further ambitious expansions, backed by significant investments from DPI, Lorax Capital Partners, funds managed by Apis Partners LLP, Lunate, and GB Corp, including a $40 million contribution from the IFC, part of the World Bank group, culminating in over $630 million raised in equity and debt.