Mounir Nakhla on his blockbuster IPO and why the first person he talks to each morning is someone named Apollo

Soon after MNT-Halan announced that it was heading to the EGX, in what is now one of the largest IPOs Egypt has seen in years, EnterpriseAM’s editor-in-chief, Patrick FitzPatrick welcomed founder and CEO of MNT-Halan, Mounir Nakhla, to our stage. In his first public appearance since the announcement, Nakhla spoke candidly about the IPO, what is bringing foreign investors back to Egypt, the business that he began building 17 years ago, and his friend Apollo.

Why was this the right time to go public? It's a function of the market, which has performed exceptionally well in the past two years with triple the number of investors and the number of daily trades increasing 5x, explains Nakhla. “It wouldn't have been possible in 2024 because the market was too small. Now, “Egypt's macro is better and Egypt's companies are better.”

From financing for tuk-tuks to the largest non-bank financial services company in the country. Today lending is MNT’s core revenue and profit generator. “We make money out of providing access to finance to people who otherwise wouldn't have access,” said Nakhla..

The company provides everything from microfinance, consumer finance, SME lending, asset lending, and vehicle financing, to agricultural lending.

The business that is listing is not the parent company but the Egyptian unit of MNT-Halan. We've got a [holding company] based in the Netherlands that owns 100% of the Egyptian subsidiary, 100% of a Turkish subsidiary, 100% of an Emirati subsidiary, and about 90% of a Pakistani subsidiary,” explains Nakhla. The current offering is 20% of the Egypt subsidiary.

There’s big appetite from international institutional investors for Egypt and MTN. “The Egyptian stock market has a much larger retail base and that is creating liquidity. EGX performance in the past two years has been phenomenal. So a lot of them [institutional investors] have realized that they missed out,” said Nakhla. At the time of publication, MNT-Halan’s private placement had closed 11.2x oversubscribed with more than 300 investors across more than 10 countries — including multiple GCC countries, the UK, France, Switzerland, South Africa, and Egypt — putting in orders for the 272 mn shares at the EGP 24.50 offer price.

“Maybe even more than half the money goes to Egypt as a capital increase,” said Nakhla. “It props [up] the balance sheet. We can leverage this three, four, five, six times. It gives us firepower to grow. The remaining half — half of that, or a quarter of the total, goes to Turkey. And then the remaining amount will probably go to another acquisition.” Nakhla wouldn’t name the country of the acquisition other than to say it’s “an Arabic-speaking country.”

But is there a bubble in consumer finance? According to Nakhla, no such bubble exists. “Let's go to basics. Egypt has 5 million unique credit card holders. 35 banks have been working for 35 years. They've distributed lots of credit cards, maybe 10-15 mn credit cards. But the unique credit card holders are 5-5.5 mn,” said Nakhla. “We come into the market with a unique proposition of a card that's a prepaid card linked to the app. In a span of two years, we distributed 1.6 million cards. That tells you there's a huge market out there.”

It’s less about the demand and more on the supply side. “Now everyone's focused on risk; who to lend, how much to lend, scoring models,” said Nakhla. His NPLs over the past 12 months have increased by only 1-1.5%. “They are totally in check…within budget and totally acceptable.”

Small business loans are by far the most profitable. Nakhla explains that they are a good margin and low risk product but the market isn't growing as much as he’d like it to while the consumer finance end of the market is growing “incredibly fast.” “Now we have north of 750,000 unique borrowers that are active out of a total of c. 1.3 mn and that's growing very, very fast, with a slightly higher risk but we also have higher net interest margins, so the pricing adjusts for that as well. Those are sticky customers. Once they're onboarded, you don't lose them.”

Enter Apollo, the app that allows Nakhla to speak to his data. Apollo is the brainchild of Nakhla’s co-founder, Ahmed Mohsen. “I can ask it anything; how are we performing? Are we optimizing on pricing? In which areas? Which managers are higher-risk managers? How do I contain risk? How do I expand growth? How do I expand margins? Which portfolio should we offload? And Apollo just keeps on chatting with me,” said Nakhla.

A version of Apollo will eventually be rolled out company-wide. The Risk team and some teams in the call center are already using it. A lot of our reporting and business decisions are coming [through it],” said Nakhla. “I think in the next three months it will be disseminated to many departments within the company.”

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