Information on the Target

Raseedi is a prominent fintech company based in Egypt, dedicated to serving the country's underbanked population through its daily fintech application. Recently, Raseedi acquired Kashat, which manages Pharos Microfinance S.A.E, a subsidiary focused on nano lending. This acquisition aims to expand Raseedi's product offerings by introducing instant loan solutions, thereby enhancing its financial services for users who may not have prior access to such financial products.

Pharos Microfinance S.A.E holds a regulatory license from the Financial Regulatory Authority (FRA) and stands out in the nano lending industry by offering the only nano loan product in Egypt, which allows users to borrow up to 3,000 EGP with repayment terms ranging from one to three months. This service is especially beneficial for sole business owners and small businesses, providing the necessary financial support to manage cash flow effectively.

Industry Overview in Egypt

The fintech industry in Egypt has been rapidly evolving, driven by a significant push towards financial inclusion. With a large segment of the population remaining underbanked, fintech solutions have become necessary for addressing the financial needs of these individuals. The government's commitment to enhancing financial literacy and expanding access to banking services has paved the way for innovative platforms.

Microfinance, particularly the nano lending segment, has emerged as a crucial component of this landscape. It enables quick access to small loans, which can be instrumental in helping micro and small enterprises thrive. The presence of technology-driven companies like Raseedi and Kashat highlights the shift towards digitization, making financial services more accessible. This aligns with global trends, where fintech firms leverage technology to offer tailored financial solutions.

Additionally, the COVID-19 pandemic underscored the importance of digital finance as many individuals sought alternative means to manage their finances without traditional banking infrastructure. This shift is expected to continue post-pandemic, as consumers increasingly prefer seamless, digital-first financial experiences.

As Raseedi and Kashat expand their offerings, they position themselves not just as local players but as potential leaders in the regional fintech market, looking toward other African and Asian nations with similar underbanked demographics.

The Rationale Behind the Deal

The acquisition of Kashat by Raseedi is strategically driven by the need to enhance financial inclusivity in Egypt. By introducing instant cash loans through Pharos Microfinance S.A.E, Raseedi can provide its users with much-needed financial support in a streamlined manner. The combined strengths of Raseedi's robust credit scoring algorithm and Kashat's microfinance expertise create a unique platform to serve underbanked populations.

This deal not only serves the urgent need for accessible financial products but also embodies Raseedi’s long-term vision of a fully integrated fintech solution that encompasses both payment transactions and lending. The collaboration aims to harness big data and artificial intelligence to optimize service delivery and improve customer experience.

Information about the Investor

Raseedi is founded on the principle of providing affordable and innovative financial solutions to underserved communities in Egypt. The company has established itself as a pioneer in the fintech space, with a strong user base that actively interacts with its app for daily activities, such as making calls and managing payments. This user engagement facilitates the gradual introduction of financial products to customers who might be sceptical or lack familiarity with digital platforms.

Ahmed Atalla, the CEO of Raseedi, emphasizes the company’s commitment to driving financial inclusion and operational excellence. Under his leadership, Raseedi has developed a comprehensive credit scoring algorithm based on a wealth of behavioral data, enabling accurate credit assessments for users without any traditional credit history.

View of Dealert

The deal between Raseedi and Kashat presents a compelling investment opportunity for multiple reasons. Firstly, it directly addresses a vital gap in the market by offering instant loans to a population segment that has historically faced barriers to accessing credit. This positioning can lead to significant customer acquisition and retention as more users engage with their offerings.

Secondly, the technological backbone established by Raseedi enhances the scalability of the services provided. The ability to swiftly onboard new users through a digital eKYC process is not only innovative but also essential in a rapidly digitizing economic environment. The anticipated high transaction volume can lead to profitable returns for both entities as they tap into the growing need for financial services.

Lastly, the potential for expansion beyond Egypt into other regions holds substantial promise. Both companies aim to replicate their successful model across Africa and Asia, targeting similar underbanked demographics. This long-term vision amplifies the strategic significance of the deal, positioning Raseedi and Kashat as leaders in a burgeoning niche.

In conclusion, the partnership between Raseedi and Kashat not only appears to be a sensible investment, but it also aligns with broader trends in financial technology and inclusion. With effective execution, this collaboration could transform the lending landscape in Egypt and set a precedent for similar initiatives in other markets.

View Original Article