On IPOs and the “Egypt discount”, with MNT-Halan’s Mounir Nakhla

Mounir Nakhla: Our business is very simple, Patrick. How much have you disbursed? How much have you collected? How much customers have churned? How much have retained? How many did you cross-sell to? 

There are 6 or 7 indicators. It's not rocket science. So you just need to be on track. We need to be on it. You have to be on, on on! Plugged in, plugged in, plugged in.

—

Hey everyone.

Today on Making It, I’m talking to Mounir Nakhla.

Mounir is the founder of MNT-Halan — one of those companies that everybody in our community thinks they know, but very few of us can explain in a sentence.

The company started out financing tuk-tuks and motorbikes in Egypt. Today, it lends to consumers and small businesses, offers everything from cards to investment products, and operates in Egypt, Turkey, Pakistan and the UAE.

Depending on which part you’re looking at, it’s a lender, a fintech, a distribution network, or something that looks a lot like a bank … without deposits. For now, at least.

Mounir built this in about 17 years. And now, he’s taking the Egyptian part of his business public on the EGX. CIB — Egypt’s leading private-sector bank — said earlier this week that it would take a 2 billion Egyptian pound cornerstone position in that IPO.

MNT-Halan is putting 20% of its Egypt unit up for grabs, and the IPO should close later this month. Mounir and I spoke in September, before the announcement.

MNT is going to use the money to fund growth in Egypt — and to expand in other markets. 

The bet for the market is that the IPO brings real foreign institutional money back into Egypt.

But the test goes beyond a pop in the share price on day one. Who buys into the offering? And do those investors stay?

And the hope is that MNT is opening the door for other companies to list.

That includes family businesses that want to institutionalize.

Companies that want to raise money.

And businesses backed by private equity and venture capital that need to give their early investors a way out.

Mounir answers some tough questions. 

About talk on the airwaves of a bubble in consumer finance. 

About the risk in the loans he’s making.

And about Mounir himself. For most of the 15 or so years I’ve known him, he’s described himself as a micromanager learning to delegate.

In this conversation, he tells me he may have delegated too much. And he introduces me to Apollo, the AI tool he Wakes up to each morning.

This is a conversation about an IPO — and the two transitions that have to happen to make it possible.

Oh, and before we get started? I’m going to ask you to listen to a disclosure and then some legalese:

First, the disclosure: A few weeks after we recorded this, MNT-Halan became the anchor sponsor of EnterpriseAM AI + Innovation, our flagship briefing on AI in MENA.

Second: The lawyers — EnterpriseAM’s MNT-Halan’s and everyone else’s — really want you to know that nothing you’re going to hear today is an offer to sell securities — or the solicitation of an offer to buy securities.

Oh, and nothing you’re about to hear constitutes investment advice.

Already — with those caveats — let’s get going.

—

Patrick FitzPatrick: Mounir, welcome to Making It.

Mounir Nakhla: Thank you, Patrick. It's good to be here.

Patrick FitzPatrick: You have spent 15 years choosing your shareholders privately. None of us can fully choose, right — people can say no to us. But the final decision that "this guy is in or out of my cap table" has come down to you. And, you're going to let the market decide for you. Why?

Mounir Nakhla: Believe it or not, my first shareholder, I didn't choose him; he chose me. 

They found me. They told me, "Mounir, we've got an idea. We know about you. Let's do it."

Patrick FitzPatrick: And that was Raouf.

Mounir Nakhla: That was Raouf.

Patrick FitzPatrick: Allah yerhamo.

Mounir Nakhla: Second shareholder, I didn't choose him either. It was Ziad Abaza from DPI.

Patrick FitzPatrick: DPI, no way.

Mounir Nakhla: We were at a Christmas party and he told me, "I'm interested in your business. I've heard about you. I want to invest with you." Okay. Thereafter, I started choosing. Every shareholder that has come on board has become a friend. You develop a relationship.

Patrick FitzPatrick: How many shareholders do you have right now?

Mounir Nakhla: Quite a few. We've got maybe in the teens for the big shareholders.

Patrick FitzPatrick: These are people you know one-on-one.

Mounir Nakhla: The big shareholders, I know them all. We're friends. We go for lunches, we go for dinners, we have heart-to-hearts. And that's the best way to run a business, because it has to be done in full transparency and alignment of thought. Because once there is alignment of thought, there's alignment of strategy, and then there is trust and execution.

So, the big difference is I won't have the luxury of building these personal relationships with a public market. So there needs to be good communication, thorough communication, transparent communication. It's all a function of expectations and results. And if we can manage this dance between expectations and results, I think the relationship will remain healthy and trust will be built.

Patrick FitzPatrick: What does going public make possible for the company that another private round or more bank debt can't solve?

Mounir Nakhla: I think three main things. One: immediate access to sizable liquidity, and future access if needed. So you're bolstering your balance sheet. You're bringing money into the TopCo, whether at the subsidiary level or top level.

Patrick FitzPatrick: And in the future, you could go do another primary or small secondary.

Mounir Nakhla: 100%, with very short notice. Number two: whenever we were discussing the TopCo valuation, we had some random investors—not so many, but quite a few—that would mention, "What about the Egypt discount?" And I'd say, "Why is there an Egypt discount?" 

If you look at the peers, if you look at the market, if you look at where companies are trading, they're actually not at a discount at all. I wanted to kill this conversation. 

There is no reason to apply a discount to Egypt. Maybe that would have been justifiable in early 2024 or in 2023.

Patrick FitzPatrick: When you have a big FX overhang, a parallel market, and rampant inflation, sure.

Mounir Nakhla: But there's no reason whatsoever to have this now.

Patrick FitzPatrick: Different universe today.

Mounir Nakhla: And listing on the EGX is a testament to the value of the Egyptian business, because then it's totally transferable and tradable.

Patrick FitzPatrick: Yeah. Otherwise, you would have gone to ADX, expatriated the business, and done a listing there.

Mounir Nakhla: We're listing in Egypt. It's an Egyptian company, and we're proud. I think it's going to be good for the company and good for the market.

Patrick FitzPatrick: So you list here, your valuation is a matter of public record, and there's no conversation to be had at the TopCo level of: "how much is your Egyptian operation really worth?" 

How much is it worth? Go on Reuters, go on Bloomberg, look at the market cap. There you go.

Mounir Nakhla: And there's no reason to value another subsidiary in another country with higher multiples if the underlying drivers of the valuation here are more solid and have better growth. If the underlying fundamentals are stronger here, it should actually merit a higher multiple,

Patrick FitzPatrick: 100%.

Mounir Nakhla: The third point is government incentives, particularly tax incentives. With a certain valuation and a certain amount being listed, the government came out and said, "If you achieve these two targets, your tax rate goes down from 22.5% to 15%." That would be a big win if we can achieve it.

Number four is bringing everyone on board. We want to have everyone enjoy our journey and make money with us. If the stock price is rising, we want everybody to…. We want to share the love.

Patrick FitzPatrick: Share the love.

Mounir Nakhla: Share the love.

Patrick FitzPatrick: I'm curious why you think funds that have been out of Egypt for years and years will come back into the market for you? Looking at institutional numbers, net sellers were dominant in August, right?

Mounir Nakhla: You know, you can't take one month at a time.

Patrick FitzPatrick: You can't. But I mean, the market has been retail-driven.

Mounir Nakhla: I'll tell you my experience.

Patrick FitzPatrick: But you've been on the road.

Mounir Nakhla: I've been on the road, and I've met at least 70 or 80 investors, whether online or physically, in maybe 3 or 4 geographies.

Patrick FitzPatrick: So the Gulf...

Mounir Nakhla: The Gulf, UK, South Africa, even some US investors. 

I've had so many people tell me, "Oh, Egypt! We want to come back to Egypt. We've been in Egypt since 2006, 2007. That's a great opportunity. Is it a sizable IPO? I hope it's not one of those very small IPOs; we want a big IPO."

And the public investor is very, very different from the private investor. It's like getting into a long-term relationship or a marriage with a private investor, whereas with a public investor, it's shorter-term. They like you, they stay; they don't like you, they dump you. 

That makes it much harder on us to execute, operate, and deliver on their expectations. That's why the communication needs to be very, very good.

Patrick FitzPatrick: Before we talk about what foreign institutions like about you and what questions they're asking about you: Hussein Abaza used to turn the exchange spokesperson into the spokesperson for Egypt. It was all "Egypt political risk, Egypt macro… talk to me about the country. When will I come back to the country?" No one asked about CIB when he was at CIB. It was always, "Give me the story of Egypt, because I'm curious about Egypt, but I'm not putting money in today." 

You're meeting with people who you say are interested in Egypt. What interests them about the country now?

Mounir Nakhla: There's one incident that happened this year that has increased the Egypt confidence by a multiplier: how the Central Bank of Egypt handled the crisis around the regional conflict.

Patrick FitzPatrick: Hassan [Abdalla] has been freaking on point the last...

Mounir Nakhla: On point. And everyone has been speaking incredibly well of the movement from EGP46 to EGP54 and then subsiding again. This has created a lot of confidence. 

Number two is the outlook on the stability of the country, not only in absolute terms, but in relation to others in the region.

Patrick FitzPatrick: It feels good that we're the ones who are stable for a change, right?

Mounir Nakhla: It's great to have Egypt where it is today. 

Number three: as I mentioned, a lot of these public market investors are traders. If Egypt has done well for them or for other investors in the past two years, they want to be part of the party. Giving them an opportunity with a sizable offering can bring them in.

Patrick FitzPatrick: Explain to our listeners why a sizable offering is important.

Mounir Nakhla: Because of minimum ticket sizes. If you have an investor's minimum ticket size is USD15 million, and if the whole IPO is USD20 million, it doesn't work. They have limitations.

Patrick FitzPatrick: Because it costs them as much to do due diligence on a USD1 ticket as it does on a USD15 million ticket, right? They have to spend time. They have to make it worth their while. They have to justify it to their investment committee.

Mounir Nakhla: 100%. But it's not only that. This is something I've been learning in the last 2 or 3 months. What I'm seeing is investors have two criteria to quantify their investment ticket. One: if they decide to exit, how many days of liquidity can they exit on? 

Some investors will tell you five days, some would say seven, some ten. But there is a cap there, so they need to estimate how much liquidity there will be, and that caps their ticket. 

The other thing is that it has to make some sort of a percentage of their assets under management. If a fund is managing USD3 billion, how low can they go? That's where the tension comes. That’s why a sizable offering attracts a lot of people. 

And honestly, to have a liquid stock is one of our objectives.

Patrick FitzPatrick: How much of that is in your control? How do you, as the company, set out to design a capital structure that gives liquidity?

Mounir Nakhla: I'll tell you something, Patrick, as a matter of principle. Very, very few things in this world are within your control. 

Patrick FitzPatrick: 100%. 

Mounir Nakhla: But if you set off with the right intention and put in the effort, you usually get to the result you want, irrespective of control.

Patrick FitzPatrick: So that's your hope, right?

Mounir Nakhla: It's a target. It's something we're talking about, for sure. We want liquidity. Do we have liquidity? Not bad, but we need to increase it. What do we need to do? Get the right advisors, get the right people on board. You'll have it as long as it's on your target list.

Patrick FitzPatrick: Because there are others who have struggled with that question in this market.

Mounir Nakhla: In order to have liquidity, you need to have buyers and sellers. So you can't say, "I just want buyers—people who are going long." Having buyers and sellers, with maybe a few more buyers than sellers, just to keep the price going up, it means you're doing a good job. That's how we'll try to do it. 

And retail helps with liquidity.

Patrick FitzPatrick: What would make this a successful IPO?

Mounir Nakhla: If it pops.

Patrick FitzPatrick: What's a pop?

Mounir Nakhla: That's a difficult one.

Patrick FitzPatrick: No, I'm not asking you to put a number on it. Explain to people what a pop is. 

You gotta remember a lot of people listening to this are going to be thinking about IPOs for the first time—younger listeners who haven't been through a successful IPO in Egypt.

Mounir Nakhla: A pop is…. Typically, when you list, you set a valuation for the company. There's a whole exercise regarding how much the company is worth. You've got analysts from banks, independent financial advisers, and a whole bunch of people who are putting a value on your company. 

Then the bankers come to the owners and say, "Hey guys, we want a discount." Why do you want a discount? "We want a discount."

Patrick FitzPatrick: Nobody wants to give a discount.

Mounir Nakhla: I don't want to give a discount, but we're going to give a discount. Okay. 

So you give people a discount. What typically should happen on day one of trading is the value of the company goes from the discounted amount you sold at the IPO to the real value of the company. That's the pop.

Patrick FitzPatrick: So a pop on day one. And before we started recording off-camera, you promised to come back in 12 months to talk about how everything went, right?

Mounir Nakhla: That's a lot of pressure. I don't only have to answer to the public market, but I also have to come back to Enterprise to answer to Patrick!

Patrick FitzPatrick: You're coming back.

Mounir Nakhla: I'm looking forward to coming back with my head held high.

Patrick FitzPatrick: What's success 12 months from now? What does it look like for you?

Mounir Nakhla: Success in 12 months is everyone who joined our journey being happy.

Patrick FitzPatrick: That's a big goal.

Mounir Nakhla: It's a big goal. For them to be happy, we need to give them good returns. So that's success.

Patrick FitzPatrick: So share price performance. And the bottom line of the company is growing. 

Mounir Nakhla: With the IPO, people are coming to make money. We're a growth story. We have a lot of efficiencies to capture—whether in risk, costing, or growth. 

If we execute well and the macro is doing well, the share price should have a positive streak, giving good returns to investors so they would be happy. And if they're happy, I'm happy.

Patrick FitzPatrick: All right. When we come back: what does MNT-Halan actually do? How does it make money, and where does the next phase of growth come from?

—

Patrick FitzPatrick: So I am a prospective investor. What is MNT-Halan, and why should I buy the stock? 

Mounir Nakhla: We're the largest non-bank provider of financial services through technology, but also through a very strong physical presence. We have an integrated ecosystem where we provide financing, investment opportunities (whether in money market funds), payments, cards, wallets, and value-added services (whether it’s games or a marketplace) to acquire and retain customers. Once you join us, it's very unlikely you'll leave our ecosystem because you have so many products. 

We're laser-focused on growth and profitability. We manage risk well, and we have a tech team that's a hundred people. A hundred people that are working on scoring models, AI, and operational efficiencies to improve our bottom line and margins.

Patrick FitzPatrick: And who are your clients?

Mounir Nakhla: Every Egyptian: small businesses, micro-businesses, and big businesses. 

So think of someone who wants to buy a mobile phone or a television, or a father who wants to marry his daughter and buy her stuff on credit. Think of a scaling small business in agriculture, an owner of a light vehicle, or a small kiosk owner who wants to stock more expensive products, and we provide financing for that.

We also have a card that is a unique card: our card works both credit and debit, and that’s a unique proposition. So you do that swift change through the application.Think that Egypt has maybe 5.5, maybe 6 million unique credit card holders out of a population of 115 million people. 

Thirty-five banks have been distributing cards for 35 years, and they’ve distributed to 6 million unique people; in two years, we distributed to 1.4 million unique people, of which 25% to 30% are active users.

Patrick FitzPatrick: Active users.

Mounir Nakhla: So we’ve got today maybe 2 million users, maybe 1.3 to 1.4 million borrowers. The scale of growth, distribution, with the technology, with the app, with the cross-selling represents a unique proposition for financial services in Egypt.

Patrick FitzPatrick: How does the Egyptian company make money today?

Mounir Nakhla: We've got many sources of revenue — whether payments, e-commerce, or commissions from investments — but the main way we make money is from lending funds.

Patrick FitzPatrick: So you effectively have a NIM.

Mounir Nakhla: We have a net interest margin. Then you've got the cost-to-income ratio and cost of risk, and that's your bottom line. So you make money from the NIM, 100%.

Patrick FitzPatrick: How much of your top line is that, roughly speaking?

Mounir Nakhla: Ninety-plus percent.

Patrick FitzPatrick: What products, lines of business, or types of clients are the most profitable for you?

Mounir Nakhla: Unit economics is a curious thing because we've got some products that have lower NIMs, but on a risk-adjusted basis, they're quite profitable. 

Then you've got other products that are quite digital; they have a high cost of risk, but a very, very low cost to serve.

Patrick FitzPatrick: Okay.

Mounir Nakhla: Because if you're distributing digitally, or underwriting digitally, and collecting digitally, there's very little SG&A cost — it's pretty low. We have a greater appetite to take a bigger cost of risk because the cost-to-income ratio is low. 

But in general, we try and have most of our lending products land on a bottom-line, on a unit-economic level more or less the same range.

Patrick FitzPatrick: And you're playing with a mix from there.

Mounir Nakhla: Yes. You're playing with three main things: Your net interest margin, which… The cost of funds is steady, so you don't have a lot of autonomy over that. Then the pricing, which is the yield. 

And number two is the cost of risk: how good are our scoring models here? Do we need an additional layer of scoring, etc? And [we look at] this segment vs. this segment. And number three, is there a high risk to operate it, or is it a low risk? You take these three, put them in a mixer, and get your unit economics.

Then there's one fourth variable that’s always in mind, which is growth. 

Because we're handing out money to people, so our business is very easy — it's not rocket science. Who wants money? "I want money, I want money!" We're really distributing money, right?

Patrick FitzPatrick: The difficult part is getting it back.

Mounir Nakhla: It's getting it back! It’s how you assess risk, how you collect — that's the difficult part. 

Growth becomes an issue, because if we have a lot of funding available and firepower to grow, we can say, “Okay, we should now grow more this quarter at worse unit economics, whether it’s higher risk cost, or, or.” 

As long as it's a management decision, and whatever you’re forecasting happens, then you know you're on the right track. The problem happens if we estimate that if we make a few management decisions, and that [something] would be the result. And if the result is different, then we’re off track. 

Patrick FitzPatrick: So how do you grow? If revenue in Egypt today is 100 units, what takes you to 200?

Mounir Nakhla: Distribution, and products, and retention.

Patrick FitzPatrick: Okay. Walk us through that.

Mounir Nakhla: Back in the day, I started opening two branches and I said, “Oh my God, they are doing well. Let’s open more branches!” So I opened more and more. And every branch I opened was attracting more customers. 

The first lesson I learned back in 2012, is that if I'm available to people, people come to me. I might just be successful because I’m there. Sometimes you buy this mint at the store just because they're right there. It’s not because you wanted to buy this mint.

Distribution: I need to be out there. 

Today we distribute digitally very strongly through our app, digital platforms. I want to be popping up on your mobile phone everywhere you go, but I also want to be present in malls, on your summer holiday. I want to be present at the sporting clubs. I want to be present in every governorate in Egypt… So, distribution. 

Patrick FitzPatrick: Online and offline.

Mounir Nakhla: Online and offline. 

Going back to 2012, after I opened a few hundred branches, I said, "Okay, we're selling one product: Bajaj three-wheelers. “Why am I only selling one product? Why don't I sell motorcycles?" 

I sold motorcycles, electronics, and electrical appliances. And the more goods I put at this distribution point, the more customers I got. So that fuels growth.

In today's world, I want to make a loan product that is specifically tailored to you. If you are a person who does agriculture and you want a seasonal loan with the first installment after four months but the second after six (or the opposite). Every business has its own unique needs. The more products we have, the better, from a consumer point of view. I think the genius that Ahmed Mohsen, my co-founder, came up with was the toggle-on toggle-off  button on the app to convert the card from a debit card to a credit card. 

Consumer finance was originally based on a closed-loop system, where you'd underwrite credit to a customer; you’d give him the credit on the application, he’d need to go to a merchant [and] pay from the credit through an OTP. With the card, we disrupted the closed-loop system into an open-loop model, so any POS in the country works. So what do we need to do now?

I've distributed 1.4 million cards. In a bad month, we distribute 50,000 cards; in a good month, close to double that. I want to keep on distributing more.

If other payment service providers in the country continue to distribute POSes, the use case will increase. But the good thing about our growth trajectory is it’s a blue ocean. Turkey has 40 million unique credit card holders; Egypt has what? 15% of that? So, the market is there and the market is big, and we're going to seize it.

Patrick FitzPatrick: You still have an offline network. You have physical branches. How much of new lending starts digitally, and how much starts at a branch today?

Mounir Nakhla: Our consumer finance business today, [which is] predominantly card-driven, has north of 700,000 clients. So it’s the majority of the business by client count. 

The model is simple: you attract the customer digitally or you attract them physically, the ultimate objective is to put them on the app.

Patrick FitzPatrick: You want to serve them digitally.

Mounir Nakhla: And once you serve them digitally, you cross-sell to him, and you retain him, and you keep developing a digital relationship with him. But I can say that more than half of our customers have been first digitally attracted.

Patrick FitzPatrick: Nice.

Mounir Nakhla: Where we are today is the result of 15 or maybe even 16 years of hard work. 

The hard work resulted in an unbeatable team, whether digitally or physically; digital assets that no one else in the country has. So a core banking software, an app, a card, a wallet, scoring models, CVM models, risk models. 

So you’ve got models that were uniquely designed for the business, a client base that is unmatched in Egypt and that is stick. Also — we're very proud to have brought into the official financial world more than 500,000 people who did not previously have financial history.

So that gives us a unique advantage because we brought them in and then now we retain them, and we’re bringing more in. So we’re also tapping into a segment that is unique.

Now put all of this on the side. If my partner was not GB Corp in 2010, I wouldn't be where I am today. They gave me corporate guarantees. My balance sheet was small and they said: "We have a bigger balance sheet. Any bank, lend these guys. If they don't repay, we're gonna repay. We’re going to cover it" 

That stayed on until 2018 until we became bigger boys and we could take care of ourselves. But for eight years I had corporate guarantees.

Add to that our treasury. Now we’re tapping into a whole bunch of offloading mechanisms — whether bilateral offloading, sukuk programs, securitization programs, and issuing of bonds. 

Bring in another company and tell them offload, [you’ll find] the economics are very complex. Tapping into this market is difficult, doing in time is hard. The accounting of it is complicated. 

So, financial strength and operational strength. Add to this, the regulators do not want more entrance. The FRA is not issuing any more new licenses

Patrick FitzPatrick: The players today are the players for the foreseeable future.

Mounir Nakhla: Put all of this together, that's our moat.

Patrick FitzPatrick: Cards, payments, lending, savings, investments... Are you building a neobank? Sounds like you're just missing deposits, man. Maybe a stock brokerage?

Mounir Nakhla: We acquired a stock brokerage company! I didn’t tell you that?

Patrick FitzPatrick: I knew you did, I just didn't know if it was on the record.

Mounir Nakhla: It's on the record. We've linked the stock brokerage to AI models, and it's in a soft launch. We haven’t launched, but all our team now are using it, and every other day someone walks into my office saying, "Mounir, use it! I've made so much money! Mounir, the AI models are great!" 

I’m just saying that Ahmed did a brilliant job linking his Halan brokerage with an AI model. So this is already there.

If we are able to raise retail funding to fund our loan book — whether through deposits, or a special fund, whether through asset-backed securities — in whichever way, shape or form — this would unlock huge potential, both in margins and in firepower to grow.

Patrick FitzPatrick: So do you want to be a neobank?

Mounir Nakhla: Do I want retail money to fund my loan book? 100%.

Patrick FitzPatrick: You suggested earlier — not exactly your words — that any monkey can write a loan, but only the professionals bring it back in, which opens the question of risk. 

We saw earlier this summer, Hisham Ezz Al-Arab, the CEO of CIB, warning that weak credit policies at non-bank lenders could start a fire in the formal banking system. And it seems like the Central Bank tightened funding rules in response to that. How serious is that risk that Hisham identified in your view?

Mounir Nakhla: I think it was overstated. 

If you compare non-banking financial institutions' risk profile for consumer finance, and you compare those with banks' credit card risk numbers, they're the same — or banks might be worse. So I think it's a bit unfounded.

However, the decree that came out from the Central Bank of Egypt had to be done. I think it is the right move. It is the job of the Central Bank of Egypt to protect the banking system, and banks should allow for risk-weighted averages. That's not a problem. They should consider that if we've offloaded, that inherently there is also a risk to the company. So the single obligor is totally legitimate.

And I think balance sheets of banks allow them to continue offloading and securitizing and bilateral offloading despite these regulations. 

Third, and most importantly, the CBE said, "Banks, we want a policy.” Every bank should have a policy." Is that too much to ask?

Patrick FitzPatrick: Show me that you've thought it through.

Mounir Nakhla: Show me that you've thought it through. 

So, I think the real underlying risk comes from the ultimate borrower. If people are repaying and we are collecting, and there is no systemic risk, things should be fine. The big difference between NBFIs and banks is that NBFIs lend from their equity and their debt. Banks lend with depositors' money. 

One needs to really digest this distinction to understand how the ecosystem operates.

Patrick FitzPatrick: Has anything changed in availability and cost of funding for you guys since the decrees came down?

Mounir Nakhla: Some banks are preparing their policies and finishing their policies to do that. Cost went up half a percent, or 1%. Of course, banks are becoming more opportunistic — there’s less supply so they want to increase the price, which is just the basic norm of supply and demand. 

We are doing three securitizations that we're hoping to close in Q3. They might close, they might not close, but we're working on them. They're quite advanced. So we're overall cautiously optimistic.

Patrick FitzPatrick: There have been bears looking for a way to call the growth of consumer finance a bubble. And the industry is going through some headlines right now because of what looks like fraud committed by an educational institution against another player in the market. 

Bottom line: how concerned should we be about your industry? Not about your business, not about MNT, but about your industry?

Mounir Nakhla: Fraud is fraud. It happens in every industry. I think the right thing to do, once there is fraud, the right policies, right regulations, and the right backstopping should be in place. 

What would worry me about fraud enormously is if fraud is committed and not brought to light or caught for a year or two — that would be very dangerous. But if fraud was committed and it was caught within a month, two, or three, it means the system works. The integrations work.

We have a very strong regulator that, despite what others might believe, is quite stringent. We go through multiple audits on multiple departments. They're super focused on limiting any type of fraud and to regulate the industry very well. Despite some people criticizing them for being quite stringent, we're very happy to have a strong regulator because it governs the industry.

Patrick FitzPatrick: All right. You brought it up. It's September 2026, so we're legally and constitutionally obligated to talk about AI for at least a few minutes. 

Ahmed Mohsen built AI models for your brokerage rollout. It's unfortunately rare that you see AI being used to make a product better rather than to cut costs. But let me start on the cost-cutting side of the ledger.

Mounir Nakhla: No, I want to start by making it better. Because it's not only a product. 

I'm quite addicted to the generic AI models — ChatGPT, Claude, whatever. And if one of those were to speak about me in public one day, I think I'm going to go under a rock and never come out! I told them everything, I'm gonna die! It's just gonna kill me.

Because I have this crazy habit of chatting with these models, Ahmed developed (initially a model) but now it’s running on an app called Apollo. And it speaks to your data. 

So I wake up on a random day like today and I’d ask, "Apollo, how are collections compared to last month? Are we setting off better or worse? Who should I focus on today? Who should I call today to follow up on operations?" 

And Apollo gives me the exact name of the area manager, the supervisor, the branch manager, or the collection agent that I need to call today — not tomorrow, today. Yesterday there was a guy named Ali, I’m not going to say his last name. But his collections were really bad.

Patrick FitzPatrick: Ali’s in trouble.

Mounir Nakhla: He was in trouble! Right before leaving the office yesterday, I told his manager, "Call Ali, bring him in tomorrow. I want to know what's happening with his loan book." And that's a big loan book.

So I’m just saying, Apollo is crazy. You want to discuss efficiencies, incentives, pricing, yield on-book or off-book— you name it, you ask Apollo. I'm starting to chat more with Apollo than on my other hobbies. Apollo is competing with ChatGPT.

Now Apollo is still not readily available for everybody in the company, but what Ahmed is doing is he’s trying to work on the hardware investments. He's been quite frugal, and I appreciate that because it can become a crazy budget. He structured it in such a way, and he told me we're calling it "Mini Apollo.” Because it doesn’t give you these very elaborate answers, just shorter and to the point, with less hardware investment. Then we can disseminate this to our whole team.

Patrick FitzPatrick: So you're running this in your own cloud, on-prem?

Mounir Nakhla: It's on-prem.

Patrick FitzPatrick: What model are you using? Open source?

Mounir Nakhla: The model I'm currently using with Ahmed is open source. The data science team has worked under Ahmed's supervision to work with Claude on another model that I haven't tested yet. They told me, "We want you to test it before we roll it out."

But think of now: speaking directly to your data brings crazy insights you wouldn't imagine. If you're a risk person and you want to start discussing how to reduce risk. And you’ve got maybe ten different products in consumer finance, different distribution points, different customer profiles — young people, older people, men, women, children, people in Heliopolis, people in Minya, Daqahliya, or Sohag — and you want to find low-hanging fruit to reduce risk, that's what it serves you.

And then it can also read the iScore numbers; we link this to the AI model as well. So we can say: "Guys, you’ve been thinking that you could handle customers below 500x iScore. Some of your areas can, but those areas can't." So you cut those off. So it’s risk management. 

It's [also] optimizing pricing. “These customers, if you put 1% or 2% more interest, it won’t hurt them. You won't lose customers.” Push up here. “Here, if you reduce prices a little bit we’re expecting a more than proportionate increase in productivity.” So on and so forth, and the sky's the limit.

So I think where we are today, we're just scratching the surface, but the potential is unbelievable. 

There are lots of other departments that are currently using [AI]: customer service, bots, phone calls are recorded and transcribed. They're using it everywhere, and I am not the best person to talk about it. But my firsthand experience has been unbelievable.

Patrick FitzPatrick: Sounds like you're an AI optimist.

Mounir Nakhla: Optimist for our company? Yes. For the world? That's a bigger conversation.

Patrick FitzPatrick FitzPatrick: How do you feel about the world?

Mounir Nakhla: I feel great about this.

Patrick FitzPatrick: So we're all still going to be employed five years down the road?

Mounir Nakhla: Whatever comes our way, we'll manage. Whatever comes our way, we will manage it.

Patrick FitzPatrick: What economists call a tail risk—you can't control it, so try not to worry about it too much.

Mounir Nakhla: In Arabic we say, el mogah ‘alia (it’s a rough patch).

Patrick FitzPatrick: Aywa.

Mounir Nakhla: El mogah ‘alia. So, khalas. 

Patrick FitzPatrick: Khalas, what are you gonna do? 

—

Patrick FitzPatrick: What's going public is the Egypt business. There is still this thing that you call TopCo, which is MNT out of the Netherlands that has operating subsidiaries in Turkey, Pakistan, and the UAE. 

What is the relationship between Egypt and TopCo? And who captures the proceeds from the IPO?

Mounir Nakhla: The proceeds from the IPO, maybe 20% or 30%, will go into Egypt. The exact percentage is still undisclosed and being discussed, but within that 20% to 30% range will go into the Egypt business. To bolster its balance sheet, to give it financial strength, to give comfort to all our banking and non-banking partners, and strengthen the company for the next chapter of growth.

The regional business: we currently have a big operation in Turkey that has its own CEO and management team. We’ve got our own CEO for the microfinance bank in Pakistan, and an operation in the GCC that has its own CEO. 

So my role on a regional business is really like a non-executive chairman. Whether we’re doing M&A transactions, strategic direction, etc. My role is CEO of Egypt.

Patrick FitzPatrick: You're day-to-day is the CEO of Egypt.

Mounir Nakhla: I'm the CEO of Egypt.

Patrick FitzPatrick: How much autonomy do country CEOs have over their individual businesses?

Mounir Nakhla: A lot of autonomy. We agree on a business plan once a year, we review it quarterly. And they run the day-to-day operations, that's what they do. 

In terms of strategic direction, a CEO has a lot of convincing power.

Patrick FitzPatrick: What makes the businesses more valuable together, if you're looking at this from a TopCo point of view, rather than individually?

Mounir Nakhla: Risk diversification. A bigger total addressable market. And then, the total addressable market is not just the countries you operate in — it's all the countries you can operate in. And that's what makes it very exciting, because then the sky's the limit.

Patrick FitzPatrick: Is it hard to be laser-focused on “smaller details” in Egypt when you see so much regional opportunity?

Mounir Nakhla: No. It's been one of my assets to be able to go granular into details and then take a parachute up and see….  To be able not to lose sight of the forest, while still looking at the trees and observing the trees.

Patrick FitzPatrick: For listeners out there, Mounir and I have known each other for more than 15 or 16 years now. I've seen your ability to zoom in and zoom out. Is that something you were born with, something you cultivated, or something you had to beat into yourself? 

How did you cultivate that? Or is it, “I just wake up in the morning and that's me?”

Mounir Nakhla: It comes as second nature to me.

Patrick FitzPatrick: Second nature. So you've always been that way.

Mounir Nakhla: I've been that way.

Patrick FitzPatrick: Why do you think other people aren't?

Mounir Nakhla: I don't know that other people aren't.

Patrick FitzPatrick: I think a lot of other people aren’t. A lot of people struggle. 

In academia, you have lumpers and splitters: people who have to slice and dice and come down to the lowest common denominator and look at the lived experience of female bawabs who are missing two toes to tell the story of the revolution. Versus those who look at the grand, sweeping forces of history to talk about why we have a revolution. 

You either see the forest or you see the trees. People who can do both are rare.

Mounir Nakhla: I’m trying to think this through. 

I think my motivation is selfish and immediate. I'm trying to be on the right track and doing the right things today. But in order to do that, I want to look out ahead and make sure I'm on the right track. 

My ultimate motivation is either to convince someone, to convince myself, or to ensure that today I'm in the right place and I’m attending to the details of today.

Patrick FitzPatrick: So you've got to be the navigator who’s taking the sight of that bear… 

Mounir Nakhla: The navigator is the right analogy. 

Patrick FitzPatrick: Okay. You have long described yourself as a micromanager learning to delegate. Where are you in that journey?

Mounir Nakhla: I've learned.

Patrick FitzPatrick: You've learned.

Mounir Nakhla: Now I'm trying to unlearn.

Patrick FitzPatrick: Seriously.

Mounir Nakhla: I'm trying to seriously unlearn to delegate. I think I've delegated a bit too much.

Patrick FitzPatrick: Really, man?

Mounir Nakhla: Yeah, really.

Patrick FitzPatrick: What's one thing that's happened recently that you're able to talk about that gives you that sense?

Mounir Nakhla: When you delegate, you’ve got managers, and the managers have full responsibility. Initially, they consult you on things you typically used to discuss together. 

A few months later, or a year or two years later, they gain a lot more confidence and start excluding me from small day-to-day decisions they think they can…. Because there are lots of small decisions, day-to-day decisions…

Patrick FitzPatrick: They add up.

Mounir Nakhla: They add up.If I look at a part of the business — core or support — and see decisions I used to be involved in leading to something I'm not happy about, it's like a physiotherapist diagnosing a walk: "Okay, one, two, three, you're not walking well." I can diagnose it and then I work back: how were these decisions made? It was this small decision, that small decision, another small decision.

Patrick FitzPatrick: It's rarely one big bad decision.

Mounir Nakhla: Rarely one big bad decision — there are multiple small ones. 

But when I think about it, had I not done that, I wouldn't have had the bandwidth to make bigger, positive strides and steps that put the company in better standing. It's that dance or that tension that needs to be managed well, and I don't know if there's a textbook for that.

Patrick FitzPatrick: I don't think there is. It's so people-dependent and circumstance-dependent. 

What's the hardest conversation that you still have to have on a regular basis?

Mounir Nakhla: It’s usually performance — monthly performance.

Patrick FitzPatrick: You do monthlies?

Mounir Nakhla: Yeah, monthly performance. So I've got 5 or 6 people who are key to the operation of the business. People handling products and geographies, and we have monthly performances. 

Our business is very simple, Patrick. How much have you disbursed? How much have you collected? How much customers have churned? How much have retained? How many did you cross-sell to? 

There are 6 or 7 indicators. It's not rocket science. So you just need to be on track. We need to be on it. You have to be on, on on! Plugged in, plugged in, plugged in. 

You blink, you lose. That's how the business is. You can't blink. You blink, you lose.

Patrick FitzPatrick: So that's what you have to watch. 

Alright, sir, last question for today, and then we'll have you back in 12 months to see how we do: What excites you most about the business in Egypt in the next 12 months?

Mounir Nakhla: That although our performance is very rewarding and quite exciting and quite good, because I know the business so well, I see that there are so many things that could be done better and more efficiently. Getting these things done within a year will be extremely rewarding. 

So, there are a lot of exciting things happening, and, obviously, chief among them is attracting more customers that stay within the ecosystem and don't leave us.

Patrick FitzPatrick: All right, Mounir. Thank you so much for joining us today. We need to get you out of here to catch a flight, man.

Mounir Nakhla: Thank you, Patrick. That was amazing. Always good to see you.