Sunday, October 1, 2023

Orascom Financial Holding Company is adopting ambitious long-term investment and expansion plans, most of which focus on supporting and developing the business of its subsidiary “Clever” for financial technology and electronic payment.

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Al Mal met Nils Bechtler, CEO and Managing Director of Orascom Financial Holding, in the first private interview to talk in depth about the details of the future investment plan of the divided company on Orascom Investment Holding, owned by businessman Naguib Sawiris, and others.

Bechtler pointed out that the executive management of Orascom Financial is currently preparing a long-term strategic and investment plan that covers 3 to 5 years and includes all financial aspects and some new ideas and partnerships in preparation for presenting them soon to the board of directors for discussion and then obtaining approval to start immediate implementation.

Orascom’s financial holding portfolio includes under its umbrella “Contect” financial holding company and “Clever” financial technology services, while it recently exited its entire share of “Beltone” financial holding company in favor of “Shimera” for UAE investment in a deal worth approximately 385 million pounds. .

We aim to turn “Clever” into an entity that covers all governorates, starting with Cairo and Giza

The bulk of the dialogue with “Buchtler” took over the development plan of the “Clever” company, stressing that the majority of the investments that Orascom Financial will monitor, whether it is self-owned or from the proceeds of the exit from Beltone, will be directed to support “Clever” during the coming period.

Initially, Bechtler said that Clever was established last year as a company specialized in financial technology, and has already obtained initial approval from the Central Bank’s Payment Systems and Services Sector to launch its mobile application and issue prepaid cards.

He explained that Clever is affiliated with Dot, which is 80% owned by Orascom and 20% by Axel, with an initial paid up capital of more than 100 million pounds.

It is noteworthy that Orascom Financial Holding Company had previously announced the launch of a new financial technology and electronic payments company in partnership with Accel.

Bechtler confirmed that Orascom Financial Holding is currently focusing on Clever with the aim of turning it into one of the leading entities in the sector, and therefore a large part of its investment will be directed to Clever.

He pointed out that Clever, as a payments company, aims to cover all governorates in the Egyptian market in the future, but will start first in Cairo and Giza, and then expand according to customer needs.

He said that Orascom Capital is currently directing all its focus to the “Clever” company and the venture capital fund that it seeks to launch, and does not plan to enter into multiple subsidiary activities.

He added that Orascom Financial Holding is basically the result of the division of Orascom Investment Company, and therefore it is considered an emerging company despite being listed in the stock exchange.

He explained that similar companies are usually unrestricted, given that the listed entities in most cases have reached some stage of maturity and have been operating in the market for many years.

He stressed that Orascom Financial Holding is also interested in carrying out acquisitions of new entities and is studying the available opportunities in the market, and if there is a suitable entity at a good price and works in an activity complementary to its business, it may proceed to acquire it directly, as the company works with the methodology of the financial investor, especially in the field of technology.

He said that Orascom targets the technology and financial technology sector only, which prompted it to exit from Beltone Financial Holding Company recently, as it seeks to exit from any other activities other than its main field.

We seek to create solutions to facilitate financial transactions.. Similar partnerships with “Visa” are being prepared and will be disclosed soon

Bechtler pointed out that Clever has recently partnered with the Arab African Bank and Visa, the pioneering company in the digital payments sector in Egypt, and is awaiting the issuance of the final license from the Central Bank to launch the service, which is expected to happen within weeks.

He said that the partnership with “Visa” will include “Clever” issuance of “Visa” cards, pointing out that the electronic payments company cannot start its activity without cooperating with a bank and a company such as “Visa”, and therefore they are necessary and binding conditions.

He stressed that similar partnerships are being prepared at the present time, such as “Visa”, which will be disclosed soon.

He explained that Clever is working on creating solutions to facilitate financial transactions, and will also provide, during the current year, other services other than payment cards within the framework of its plan to adopt digital solutions based on technology, preferring not to disclose them specifically at the current stage.

Venture capital funds are successful and have been around the world for decades

He revealed that Orascom Financial is currently studying the establishment of a venture capital fund, working in the field of technology, explaining that the size of the fund depends on the market situation, the economic situation and the desire of investors who will be attracted to participate in it, as well as the market’s ability to absorb it, and the investment opportunities available, expecting that its initial size will range Between 300 and 500 million pounds.

He said that the fund’s capital will gradually increase, as it will start with a relatively limited size, to be increased in later stages, in addition to establishing other funds in the future in the same field if the first experiment is successful.

Bechtler clarified that Orascom Financial will issue the fund as soon as it is absolutely certain that it will achieve the appropriate return, and that its work mechanisms and all its controls are fully implemented.

He pointed out that preparations for the fund are underway at the present time, and the work team has also been appointed, and it is expected to start promoting its capital during next September, provided that local and foreign institutions, as well as individuals of financial solvency, will be promoted, stressing that his company is open to the entry of a large number of investors in Fund capital.

He stressed that the fund’s business model will be relatively different from the market and the matter will be presented to the board of directors before the launch, expecting to start its work during the first half of next year, after the promotion process is completed and the first closing is implemented.

field of technology in the Egyptian market.

He said that despite the risk of the fund’s business model in light of the possibility of a large number of startup companies incurring large losses, this field is very successful and has existed outside Egypt for decades, especially since the losses of a large number of companies can be compensated through the returns of one successful entity.

He added that the desire to enter this field is strongly present in Egypt and abroad, for example, Egyptian government banks have already established a company in this field during the recent period, especially since investment in technology has become an inevitable matter on different markets.

He stressed that the important thing in this matter is the investor’s awareness of the degree of risk he bears, and that there are not few possibilities of loss, which are also matched by great possibilities of success.

He stated that the Orascom team has good experience in the field of technology and venture capital, and therefore will search for promising opportunities that provide added value to the market, and that his company is primarily interested in achieving long-term returns for its shareholders.

He pointed out that there are many examples of successful companies in the technology field in the market, such as “Fawry” and “E-Finance”.

Bechtler said that the nature of the investor in the venture capital industry is different from his counterpart in other sectors, as he is more familiar with the amount of risks he faces in return for the large return that he can obtain as a result of entering into only one deal, for example, noting that there is a specific formula for investment. In venture capital, it involves taking the risk versus the return.

He pointed out that the venture capital industry has existed for decades in Europe and America, explaining that Egypt has begun to enter strongly in this industry, which we have recently noticed from government banks entering it, as technology is no longer an “option” for everyone, but has become a reality.

Egypt has supportive factors for investing in financial technology, the most important of which is the number of population and the limited operating entities so far

He pointed out that Egypt is one of the promising markets in the field, and there is a noticeable interest from external investors in this vital sector, explaining that Egypt has several factors that support investment in the field of financial technology, as it is the largest market in the region in terms of population, and it is considered an open and promising market and the entities that Working in the field is still limited.

He stressed that Orascom Financial sees great growth opportunities in the financial technology sector and greater opportunities that can be seized in the future.

We exited Beltone due to our unwillingness to raise our investments in “brokerage.” The selling pricing was appropriate and above the 6-month average.

Bechtler revealed that his company has a clear plan to invest a large part of the proceeds of its exit from Beltone Financial, stressing that a large part of the proceeds will be directed to implement the Clever plan.

Regarding the low price of Beltone’s purchase offer, which was sold by Orascom, below the market price, he said that there are several points that must be clarified in this matter; The first is that the price of Beltone’s share in the market rose after the presentation of the offer by the UAE “Shimera” company and not before that, in addition to the fact that there is a big difference between the individual investor who has a limited number of shares and the main shareholder who owns a majority stake, as the former has the ability to Selling his shares at the market price at any time, but the main shareholder can only do so through an official purchase offer.

Chimera’s offer confirms the positive vision of the sector and its ability to achieve growth rates

He continued: “We at Orascom Financial Holding believe that the exit pricing from Beltone was appropriate and higher than the 6-month average, and that the Shemera offer was a good opportunity and came at an appropriate time to implement the exit, and that its price was higher than previous offers that came to buy. “Belton”.

He stressed that the reason for Orascom Financial’s exit from Beltone was our unwillingness to raise our investments in the brokerage sector at this stage.

He added, “It is clear that Chimera, the new investor in Beltone, sees a positive future for the investment banking industry in Egypt, and that it will be able to achieve growth rates and complete the injection of investments into the company, similar to what Orascom implemented.”

There is no hesitation in investment banks and brokerage in Egypt, and the evidence is the implementation of famous acquisition deals in the recent period

He pointed out that the market has a large number of successful companies in the brokerage sector and investment banks that have witnessed domestic and local interest. For example, Banque Misr acquired the CI Capital financial company, in addition to previous attempts by First Abu Dhabi Bank to acquire the investment bank Hermes.

The managing director added: “Investors do not turn away from the investment banking and brokerage sector; On the contrary, as long as there is a buyer, it is a sure sign of interest in the sector and its attractiveness.”

He also mentioned that Orascom has a plan to invest the proceeds of its exit from Beltone to achieve higher returns for shareholders compared to its counterpart that would have achieved by staying in this investment.

We aim to pump hundreds of millions within 3 or 4 years… We are not currently thinking of distributing dividends to shareholders from selling Beltone.

He revealed that Orascom Financial aims to inject hundreds of millions in investments within 3 to 4 years, but is not currently thinking of distributing profits to shareholders from the proceeds of the Beltone sale, because those funds will be reinvested.

He added that there may be future cooperation between Clever and Connecticut, which is owned by a minority stake in Orascom Capital, but the cooperation must be profitable and profitable for both parties.

He said, “We are basically a joint stock company, and therefore our goal is to achieve profits for shareholders.”

He stressed that Orascom’s investment objectives are long-term, whether in terms of establishing companies, funds, or others. The goal is not only to achieve quick profits, but also to provide a good and safe service for investors.

Bechtler added: “The history of Orascom depends on building long-term companies and entities in which shareholders and financial investors can be present for long periods.”

Share Connect

On the fate of Orascom’s financial stake in “Contect” Financial Holding, Bechtler said: “Our investment in Contact is important and good for us, as the results of its business are constantly growing.”

He pointed out that “Contect” distributes profits periodically and we get a return for our share, and therefore we do not need to quickly exit from it at the present time, but this option may be available in the future.

He continued, “Mostly, exits from investments are linked to certain circumstances, whether our financial situation and our financial need to exit, the general economic situation or market conditions, and therefore when the time is right or there is a need for that, we can think of exiting from Connecticut.”

He explained that Orascom’s financial share in “Contact” is equivalent to huge numbers, pointing out that the research units in investment banks have evaluated our share in “Contect” with volumes that exceed the market value of Orascom Financial itself.

Other Partnerships

Bechtler confirmed that Orascom, through its Clever arm, is studying all the needs of the market and the customer, explaining that the customer is the most important element in the process, pointing out that his company’s plan focuses more on implementing some partnerships such as “Visa”.

He added: “Sometimes, we do not need to establish an entity from scratch, but the partnership will achieve the same purpose sometimes.”

He expected that the volume of partnerships in the financial technology market in general would increase due to the large size of this market and its need for more, adding: “A smart solution is for companies to complement each other in providing non-banking financial services.”

He continued, “We are currently working on a variety of partnerships, not similar to Visa, but rather include new ideas.”

Bechtler pointed out that there are many companies that have a variety of products with which they can enter into strategic partnerships so that Cleaver’s clients benefit from the company’s services, and vice versa.

He explained that the business model of payment companies in Europe and America focuses on implementing private investments for the company itself, as well as entering into other companies in the field, with the aim of providing various and multiple services to customers, which ultimately benefits everyone.

stock market situation

With regard to the current stock market situation, Bechtler believes that the world is suffering from a difficult economic period, and thus it is reflected in the performance of the Egyptian market and the low trading volumes.

He expected that the market situation would improve in the coming years with the start of implementing new proposals, whether private or governmental, which would be positively reflected on the indicators.

Technology Reviews

Bechtler said that the valuations of technology companies have witnessed great exaggerations over recent years, but they will remain matters left to supply and demand conditions and market conditions in the end.

He pointed out that the sector valuations in Europe began to decline significantly recently after the high risk rates, and this is the same approach that seemed to be observed in the local market as well.

He explained that the Swedish financial technology company Klarna, for example, had a financial valuation of more than $60 billion, which fell during a recently implemented financing round to only about $6 billion.

He believes that the evaluation process differs from one sector to another and according to the strength of the company as well, and therefore it is not possible to generalize and exaggerate the evaluations on all sectors, but I expect the evaluations of the technology sector to calm down slightly or to remain stable at these levels during the coming period.

legal part

Regarding the legal aspect of the financial technology sector, Bechtler said that the regulators in Egypt, whether the Central Bank or the Financial Supervisory Authority, have taken great positive steps to support financial inclusion and financial technology.

He pointed out that there are significant changes that investors in financial technology have noticed in dealing with regulatory authorities, unlike what was happening earlier, as things have become easier and there is a dialogue between all parties.

He said that the goal has become common at the present time, and everyone is working for one common interest, which is to achieve the ultimate goal of the state, which is financial inclusion.

He pointed out that his company is eagerly awaiting the announcement of the final features and controls of the digital banking license in Egypt, which the government aims to issue soon.

He explained that Orascom Finance is very interested in the digital bank license, but it needs to disclose the final details included, such as the capital and the nature of the services it will provide and other details to make a decision on entering it or not.

He added, “I think that the majority of companies operating in the sector are interested in knowing the details and conditions for obtaining a digital bank license.”


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