MNT-Halan surfs the Egyptian FinTech wave
In many ways, it’s no surprise that Egyptian transport start-up Halan has shifted from offering tuk-tuks and motorcycle rides to a full range of financial services. The rise of “super app” is a global trend and many companies are using a large user base to expand into other verticals.
When Managing Director Mounir Nakhla co-founded Halan in November 2017, he had already launched two microfinance companies, Mashroey in 2009 and Tasaheel in 2015.
He then laid the groundwork for what became MNT-Halan in June, combining ridesharing and loaning, Buy It Now and Pay Later (BNPL), e-commerce, payments and logistics. In August, the company integrated its core Neuron banking software and announced in September that it had raised $ 120 million from investors.
MNT-Halan is now riding the Egyptian FinTech wave, powered by improved regulation, access to finance and a tremendous opportunity to serve a largely unbanked population. The third largest economy in the Arab world is also its most populous country.
“In less than three months, MNT-Halan achieved an execution rate of 100 million Egyptian pounds ($ 6.37 million) in monthly BNPL and consumer credit issues,” Nakhla said. The National. “It’s crazy growth.”
Egypt is well positioned to become one of the world’s leading FinTech centers in the Middle East and North Africa region, according to a June report from Fitch Solutions. The trend is being driven by an enabling environment created by the government and a shift to cashless payments precipitated by the Covid-19 pandemic, according to the report.
In 2020, the Central Bank of Egypt allocated £ 1 billion to a FinTech innovation fund. And earlier this month, the central bank released regulations for its Instant Payment Network (IPN), which would allow people to make electronic payments between bank accounts using their cellphones.
Noha Shaker, founder of the Egyptian FinTech Association, said the non-profit group has worked with the central bank and the Egyptian Financial Regulatory Authority to develop new laws governing the banking and non-banking sectors in recent years. years.
“With the support of regulators on the ground, the time has come to create a FinTech start-up in Egypt,” said Ms. Shaker.
MNT-Halan has obtained microfinance, consumer and nano-finance licenses from the financial regulator, as well as an electronic wallet license from the central bank.
“The Central Bank of Egypt wants to reduce the circulation of cash and it is proposing one regulation after another to promote digital transactions,” Nakhla said. “We are capitalizing on this macro trend and the fruit at hand that most of the economy is cash based.”
World Bank data shows that 67% of Egyptians did not have a bank account in 2018. MNT-Halan estimates that more than 70% of the population is “financially underserved”.
However, Ms. Shaker goes further by defining financial inclusion as access to finance, not just a bank account.
“That’s 100 million Egyptians with a financial inclusion rate of 10-12% at best,” she says.
Halan started out as a rideshare and delivery company, using motorcycles and tuk-tuks to transport passengers and goods across Egypt. At the end of 2019, Mr. Nakhla and co-founder and CTO Ahmed Mohsen decided that the app would take more of a FinTech path.
“Ridesharing gives you a huge base of frequent users, but the economy of the unit doesn’t make sense,” says Nakhla.
The company put a team of 30 to 40 developers to work for about 18 months to develop Neuron, its proprietary payment and loan processing software, which uses machine learning and artificial intelligence to predict consumer behavior.
“It has become the backbone of our lending and payment business and it is the only software in Africa and the Middle East that has these capabilities,” he says.
In June, Halan entered into a share swap deal with MNT, the holding company of microcredit firms Mashroey and Tasaheel. The deal follows MNT’s acquisition of 100% of the shares of Raseedy, the first independent digital wallet licensed by the Egyptian central bank.
On the app, consumers can now buy home appliances, electronics, furniture and light vehicles in installments through the e-commerce platform. They can apply for loans ranging from £ 3,000 to £ 200,000, as well as pay their mobile phone and utility bills.
“We are launching multiple products, to have multiple points of contact, to keep these people within our ecosystem,” Nakhla said.
The company envisions growth over the next few years from 1 million active users to 10 million, as well as increasing its storage units (SKUs) to tens of thousands, and increasing its loan portfolio to. billions of dollars, against the current hundreds of millions of dollars.
Mr. Nakhla declined to disclose the total amount raised by Halan and MNT-Halan as a new entity. However, in December 2020 Forbes Middle East named Halan as the 10th most funded startup in the Middle East, with $ 23.5 million.
Investors in Halan’s Launch Series, Series A and Series B include Battery Road Digital Holdings of Singapore, Algebra Ventures of Egypt, Wamda Capital of the United Arab Emirates, and Oscar Salazar, chief technology officer and founder of Uber. .
“MNT-Halan is uniquely positioned to provide financial solutions, mobility and e-commerce services to the largely underserved masses in Egypt,” said Karim Hussein, Managing Partner of Algebra Ventures. “This exceptional team and their unique products are clearly the next Egyptian unicorn in the FinTech industry.”
The $ 120 million announced in September was provided by private equity firms Apis Partners, Development Partners International and Lorax Capital Partners, as well as venture capital firms Venture Partners, Endeavor Catalyst and DisrupTech.
This is by far the biggest fundraiser in the Mena region. Last year, Egypt-based start-ups raised record funding of $ 190 million and accounted for 22% of deals in the Mena region, data platform Magnit said in its 2020 Egypt Venture Investment Report. .
There are several competitors in the Egyptian FinTech space, but Ms. Shaker says “the market is huge”.
BNPL provider Shahry raised $ 650,000 in pre-seed funding in May 2020. Digital banking start-up Telda, founded in April this year, has raised $ 5 million in the largest pre-seed fund in the world. region led by Sequoia Capital.
Electronic payment solutions company Fawry became the first Egyptian unicorn when it reached a market capitalization of $ 1 billion in August 2020. The company reported net profit of £ 113.3 million in the first half of 2021, an increase of about 60% year-on-year. -year.
“The investment opportunities are unprecedented. The return you can make to Egypt competes with any mature market and also competes strongly with emerging markets, ”said Ms. Shaker.
In the first half of 2022, MNT-Halan is looking to expand to other countries in Africa with large, unbanked populations, and perhaps “a country or two in South Asia,” said M Nakhla.
When asked about the possibility of an IPO, Mr. Nakhla chose his words carefully.
“I don’t want to make any commitments. However, our group of shareholders is considering possible future listing projects in the coming years. “
The meeting has started: 2021
Founders: Mounir Nakhla and Ahmed Mohsen
Based: Cairo, Egypt
Size: ~3,000 employees
Investment: $ 120 million + (~ $ 23.5 million for Halan previously)
Investors: Aworse Partners, Development Partners International, DisrupTech, Endeavor Catalyst, Lorax Capital Partners, Venture Partners
Update: November 28, 2021, 4:30 a.m.