CIB signs on as cornerstone investor for up to EGP 2 bn of MNT-Halan’s IPO

MNT has its first IPO anchor in CIB: Commercial International Bank (CIB) signed on as a cornerstone investor for up to EGP 2 bn worth of shares in MNT-Halan’s ongoing IPO, the EGX-listed lender said in a statement (pdf) yesterday. By our math, that’s roughly a fifth of the 20% stake on offer if the Egyptian arm prices near the USD 1 bn valuation bankers were pitching in June. The agreement is dated 24 September, about a week before MNT issued its intention to float.

A good chunk of the offering is now spoken for before the book even opens in a move that reads like an institutional stamp of approval. With Al Ahly Capital, the National Bank of Egypt’s (NBE) investment arm, having led MNT-Halan’s round in June, Egypt’s largest state-owned bank and its largest private-sector lender would both have equity exposure to the group if the IPO closes: NBE through the parent, and CIB directly in the listed Egyptian arm of MNT. Both banks are already funders of its loan book, having underwritten a EGP 4.7 bn SME securitization last year by MNT’s microfinance arm Tasaheel.

None of the IPO proceeds will end up in shareholders’ pockets, but not all of them will return to Egypt, Founder and CEO Mounir Nakhla said on stage at the EnterpriseAM Forum yesterday. Half or more of what selling shareholder MNT Investments B.V. raises will return to the listed company. The intention-to-float notice pegs the closed capital increase at up to EGP 4 bn. About a quarter goes to the group’s Turkish business, and the rest funds an acquisition in an Arabic-speaking market Nakhla wouldn’t name.

Expect some blanks to start filling today: MNT-Halan will “probably” launch the offering at a fixed valuation, Nakhla said. The offering documents are with the FRA awaiting a final stamp, according to founder and CEO Mounir Nakhla, who expects them to be public by today.

The pitch to foreign funds? Nakhla says roadshow demand has been strong, including from long-only investors with “decent-sized tickets” in the double digits. His case to funds that missed the bourse’s two-year run is that they can still get in cheap, because “an IPO by definition is priced at a discount.” Questions have also moved off the macro and onto MNT’s moat and barriers to entry, with investors “much more comfortable about the macro,” he said.

Private money marries, public money trades: Private investors are “like a marriage, and I want to say nearly a Coptic marriage,” with a huge amount of due diligence before they commit, Nakhla said. Meanwhile, public investors are making “a trade”; they want a pop and enough liquidity to exit.

Nakhla credits the market for the timing: Had MNT-Halan tried this in early 2024, it would have raised USD 30-40 mn, which “didn't make sense,” he said. By his count, the number of EGX investors has since tripled and daily trades have risen fivefold. The EGX30 is up 28% YTD as of yesterday’s close, according to market data, and has finished six of nine months in the green on trading volumes that hit a record in 3Q, driven largely by a retail investor base.

No bubble, just an underbanked market: Nakhla dismissed talk of a consumer finance bubble (as EFG Holding Group CEO Karim Awad did). Egypt has some 5-5.5 mn unique credit card holders after 35 years of bank issuance, he said, while MNT-Halan put 1.6 mn of its prepaid cards into circulation in two years. Turkey has around 40 mn. The limit now is who gets credit, not who wants it, “less demand side and it’s more supply side.”

Where the brakes are still on: MNT’s non-performing loans rose about 1-1.5% over the past 12 months, which Nakhla called “totally in check.” He says the company is keeping its brakes on the riskier products. Its most profitable line, small business loans, is the one lagging: that market “isn’t growing as much as we would like it to,” Nakhla said.

MNT is also bringing AI into credit risk. Apollo, an internal data tool built by co-founder Ahmed Mohsen, tells Nakhla each month-end which collections staff to call and about which accounts, and it’s due to roll out across “many departments” within three months. “Very soon, I think Apollo will replace me. That’s scaring me,” he said.