Fawry FMCG, a leader in payment solutions for fast-moving consumer goods companies, has just confirmed its attendance at Food Africa 2021, an international food and beverage show. The expo, which will take place at the Egypt International Convention and Exhibition Center in New Cairo from December 12–14, 2021, will feature over 400 companies from 28 countries.
Ashraf Sabry, CEO of Fawry Group
“We are pleased with our participation in this edition of Food Africa 2021, where we will announce the launch of multiple new services in the Egyptian market, including the ‘Mandoobi’ application in cooperation with BI Technologies. This new application will mechanize the operations of demand between merchants and fastmoving consumer goods companies, as it allows the merchant to order products in the required quantities and determine the appropriate delivery date,” Hossam Ezz, CEO of Fawry FMCG, said.
The second service that FMCG will unveil during the exhibition activities, according to Hossam Ezz, is a ‘digital lending’ service to finance purchases from FMCG companies. This service will enable merchants to boost working capital and give alternatives to cash payments through a variety of financial products tailored to the merchant’s specific needs. It will also look at a variety of digital payment methods and how they integrate with sales automation and management systems, allowing businesses to improve their sales, collection, and finance systems’ efficiency.
Through its prominent booth at the exhibition, Fawry FMCG will represent a variety of financial and technology services. It will deliver its most important services via an integrated technical system that incorporates the most up-to-date privacy and security techniques.
“Fawry FMCG always ensures that it doesn’t miss an opportunity to be present in such exhibitions. Events like this help enhance digital transformation opportunities and develop cashless payment methods for companies. Operating in the food industry which Fawry is currently a market leader since 2015, our participation in Food Africa 2021 is an opportunity to connect with our current and potential partners, offering our various services to publish digital payment solutions. Some of these solutions include services that will increase the efficiency of their own distribution system which in turn helps in increasing the sales,” Ashraf Sabry, CEO of Fawry Group, said.
A Look At What Fawry FMCG Does
Fawry FMCG is Egypt’s first and largest electronic financial platform, serving consumers and businesses across the country through a variety of channels and hundreds of service points. Around 250,000 merchants and more than 100 FMCG partners are currently served by the Fawry FMCG platform. Its mission is to digitize supply and demand processes, as well as to create an environment in which the relationship between the store, the salesperson, and the FMCG firm is seamless, all-digital, and cashless.
Fawry FMCG Food Africa 2021 Fawry FMCG Food Africa 2021
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
Fawry, an Egypt-based FinTech and E-payment solutions provider, is now undoubtedly on a journey to invest in startups both in Egypt and internationally across several industries. Following investments in tech-enabled delivery platform Bosta last year, fast-growing F&B platform Elmenus early this year, and most recently in Brimore, a social commerce marketplace, the company’s next stop is Sudan, where it has led a $5 million funding round in alsoug.com, Sudan’s largest online classifieds platform and marketplace.
“This investment marks a significant milestone not just for alsoug, but for the nascent tech space in Sudan as a whole, which has until today been essentially shut out of the global capital markets. I hope this investment is the first of many and that the huge potential of the tech sector in Sudan is fully realized in the coming years. We are looking forward to working with Fawry, and our new strategic shareholders, to continue our expansion from the classifieds and marketplace space into payments. We will build a payments platform that will deliver financial inclusion to all Sudanese,” Alsoug co-founder and CEO Tarneem (Nina) Saeed said.
The investment will help build out alsoug’s new fintech platform, Cashi.
Why Fawry Invested
This is Sudan’s first venture capital funding round. The presence of Fawry catalyzed participation from other major Western VC players, assuring the success of the USD 5 million round. As a strategic investor in alsoug, Fawry plans to use its extensive experience with white label technology solutions to help the platform scale up by improving its merchant acquisition operation, refining its go-to-market strategy, and providing valuable insights that inform high-level strategy across all business segments.
“We’re delighted to be kicking off our partnership with alsoug, one of Sudan’s most exciting prospects and a Sudanese leader in tech innovation. This is our first investment foray outside of Egypt in our thirteen years of operation, and we’re confident that our story with alsoug and Cashi will be a special one. Fawry’s investment in alsoug delivers on our plans to venture into underserved international markets by leveraging our technology and teaming up with strong local players. This investment will provide us the opportunity to strategically expand our footprint into Africa and transfer the experience we’ve gained in the dynamic Egyptian market to neighboring Sudan, an economy with major potential across several sectors and with a significant pool of entrepreneurial talent. Meanwhile, Fawry’s strategic partnership with alsoug leaves it ideally placed to help guide the platform’s rollout of a countrywide payments system, a feat which Fawry has already managed through a scalable, robust, and best-in-class technology platform,” Fawry CEO Eng. Ashraf Sabry said.
Ashraf Sabry is the CEO of Fawry. Source: Fawry
Fawry, Egypt’s largest e-payments platform, was founded in 2008 to serve the country’s banked and unbanked communities. Fawry’s main services include electronic bill payment, mobile top-ups, and provisioning for millions of Egyptians. E-ticketing, cable TV, and a variety of other digital services are also available. Fawry’s peer-to-peer concept allows businesses and SMEs to take electronic payments using a variety of channels, including websites, mobile phones, and point-of-sale terminals.
A Look At What asloug Does
Alsoug, Sudan’s leading consumer internet platform and largest digital marketplace, was founded in 2016 by a world-class team of technology entrepreneurs. Alsoug, a platform where sellers may post everything from real estate and vehicles to services and commodities, is one of Sudan’s most popular apps on the Google Play app store, with two million downloads.
Despite the political and economic challenges facing Sudan as it undergoes a transformative political transition, the platform has grown rapidly since 2016, owing to alsoug’s highly skilled in-house developers, extensive coverage by its on-the-ground teams, and Sudan’s promising economic fundamentals. Alsoug will considerably increase its service offering in the future, establishing a new payments network capable of serving consumers across Sudan, one of the largest countries on the African continent, and building on its strategic cooperation with Fawry.
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
August, 2019. An eleven year old fintech company, Fawry, was about to do the unthinkable. Its headquarters in Cairo, Egypt was just a stone’s throw (3 minutes away) from The Egyptian Exchange, the country’s stock exchange where shares and other securities of companies are bought and sold, publicly. Everything had been planned out, and barring any last minute changes, the company founded by a fifty-something-year-old man who quit his job at the peak of his career, would be going on a major exit through Initial Public Offering (IPO) on the exchange. This would be some overwhelming moments for investors —the Egyptian-American Enterprise Fund (EAEF), the pan-African private investment firm Helios Investment Partners, and the International Finance Corporation — who had acquired a majority stake in the company far back in 2015. It would also be some exciting moments for the company’s management and employees who owned 8% of its shares. Exciting because, if the company’s shares on offer were sold at EGP 6.46 per share as it had been planned, they would, most likely, become overnight millionaires.
Ashraf Sabry is the founder and CEO of Fawry. Image credits: Fawry
But the unexpected happened, instead, when the exchange opened for trading that day: Fawry’s share price soared 31 percent higher than the planned IPO price, to close at EGP 8.48 on the first day of trading.
Reports would later come in that the IPO had been oversubscribed by 30 times.
And as though that was not enough, barely a year after in 2020, at the heart of the coronavirus pandemic, Fawry became a unicorn — a golden billion dollar company, aided by a further rise in the company’s price per share, to EGP 22.69.
Now, here are the quick takes:
Fawry’s listing was the first IPO of that year and so the thirst was understandable; but perhaps knowing that the feat was uncommon makes it even more interesting:
In 2008, when Fawry was founded, there was no single technology company listed on The Egyptian Exchange. In fact, so devastated was the exchange that its 30 most active stocks incurred 56% losses that year.
And to make matters worse, the financial services sector (excluding banks) which Fawry could have, at least, laid claims to saw a major decline of 64% in trading activities, one of the highest in years.
And so, judging by the company’s IPO success, this was a big win for early investors who threw their weight behind Fawry against the odds, as well as huge sighs of relief for founders, Ashraf Sabry and Mohamed Okasha.
“In 2008, I left my job and had limited time to convince investors that customers would trust paying their bills electronically at a grocery store. The challenge was establishing the company before my financial resources got depleted,” CEO and co-founder, Ashraf Sabry, said in an interview.
“Overcoming the challenge needed a thorough understanding of the business model, sharing experiences in other markets, committing to invest 80% of my personal financial resources in the same project and, finally, not giving up quickly. [This also involved] … trying to find new investors all the time,” he added.
“The second challenge was convincing the first biller to join the network; I still remember, it was Vodafone,” he said. “The problem was that Vodafone had to allocate resources to develop the integration with their systems and had to introduce a new competitor to their valuable distribution network. So many of the stakeholders resisted the idea.”
“I think I managed to overcome [that] … challenge by deciding to carry the cost of the implementation, to find a champion within Vodafone to support me, [putting together an] … appealing commercial deal and, most importantly, never giving up,” he further said.
“Other challenges include being almost bankrupt after three years, as well as attracting and retaining good people. I think the one factor in overcoming all challenges is, never give up and be persistent,” he concluded.
The Egyptian Exchange And Tech Startups
Going on IPO on The Egyptian Exchange, which has two branches across the country— one in Cairo and another in Alexandria — is not complicated at least for non-Arabic-speaking investors and companies.
A company may list on the exchange, either through the main board or the SME board.
The major difference between the two lies in the paid up capital requirements. That is, while a company listed on the main board is required to have not less than 100 million Egyptian pounds ($6.4m), a company listed on the SME board can have less.
A company listed on the main board is also required to have a financial history (written purely in Arabic) of not less than three years.
It is also required to offer not less than 5 million of its shares ( which must represent not less than 25% of the total shares of the company) for public sale.
The company must not also be worth less than 200 million Egyptian pounds ($12.8m).
For its part, a company listed on the SME board must have been in existence for at least two years, and must engage a contractor registered with the exchange which shall assist it to list its shares for purposes of trading.
In addition to having less than 100 million Egyptian pounds ($6.4m) paid up capital, the SME must also ensure that not less than 1 million pounds is fully paid up.
The company must also offer not less than 100 thousand shares for public subscription, which shall not be less than 25% of the company’s shares.
Furthermore, at all times, the company’s net worth must not exceed 200 million Egyptian pounds ($12.8m).
And so, it was easier for Fawry. After 11 years in operation, it had the metrics: it had received a valuation of EGP773 million (US$100 million) following investments made by the investors in 2015. It had made core profit of 152 million pounds ($9.8m) in 2018, up 41.2% on the previous year. Its network had also processed 600.1 million transactions in 2018 alone with a total value of 34.2 billion Egyptian pounds ($2.1 billion).
But for startups who don’t have these metrics, IPOs are still a long shot from reality.
“So far, I don’t think that Egypt Exchange can offer an exit opportunity for Egyptian tech startups, even if we’re offering exchange for small to medium size stocks called NILEX EXCHANGE,” Soliman S. AlTayyar, an Egypt-based capital markets and investment expert told Afrikan Heroes.
“This is because investors’ mentality won’t digest such companies at early stages…Therefore, venture capital (VC) funds are the best way to fund these “startups” until acquisitions or other exit routes, including IPOs,” he said.
IPOs on The Egyptian Exchange, for the years 2017, 2018, 2019. Source: The Egyptian Exchange
International Investors Are Interested In Egypt’s IPOs
The greatest insights into the depth of investors’ interests in Egyptian tech stocks are not in the figures trailing Fawry’s performance on the stock exchange.
The greatest insights, and the key to understanding the future of startup exits through IPOs on The Egyptian Exchange lie in the investors’ demographics.
Of the investors who participated in Fawry’s public listing, Egyptians represented 80.3% of the IPO and 50% of the private placement; while Arabs and Foreigners represented 19.7% of the IPO and 49.3 of the private.
This was expected; while the private placement was done by a foreign firm -Netherland Holding BV — the IPO was local and closer to Egyptians via the exchange.
But what is even more intriguing is the demographics of the participants in all the four IPOs that held on The Egyptian Exchange in 2019.
Valued at EGP 5.14 billion (compared to EGP 5.2 billion in 2018), the four IPOs saw 67.36% participation of foreigners, and only 32.64% of Egyptians, although Egyptians dominated total annual transaction deals (67.06% to 32.94%).
Overall, while investors from the United Kingdom accounted for 30.09percent of total foreigner transactions in 2019, the United States of America, Luxembourg, and the Kingdom of Saudi Arabia, each had a share of 13.28 percent, 10.98 percent, and 7.17 percent, respectively.
The Space For Tech Companies Is Still Small On The Egyptian Exchange
Compared to other sectors, there are currently only about six companies classified as tech on the Egyptian Exchange, out of over 220 companies listed on the exchange. And out of the six, only Fawry may rightly be classified as a digital company in the true sense of the word.
However, even though there are only a few tech companies listed on the platform, they have outperformed other sectors in terms of trading volume.
For instance, the total trading value of the shares of tech companies listed on the exchange amounted to 3.7 billion Egyptian pounds in the first quarter of 2021, compared to 5.6 billion Egyptian pounds which accrued to listed banks, even though there are 14 banks currently listed on the exchange.
Breakdown of market capitalization on The Egyptian Exchange, March 31, 2021. Source: The Egyptian Exchange
What Do Sarwa Capital And Fawry’s IPOs Mean For Egyptian Tech Startups Desiring To Exit Through IPOs On The Egyptian Exchange?
It is interesting to note that apart from Fawry, Sarwa Capital’s initial public offering (IPO) was oversubscribed 30.1 times in 2018.
In fact, apart also from Fawry, Sarwa Capital recorded the biggest IPO in The Egyptian Exchange’s two year history (2018–2019).
The company raised $13.9m through IPO and $121 million through private placement.
Sarwa is anonline investment platform owned by Egyptian American Enterprise Fund “EAEF’’.
Although fraught with allegations of fraud and described as failed, Sarwa’s IPO together with Fawry’s could be said to be the closest representation of what tech startup IPOs in Egypt could look like, all things being equal.
However, while it could be said that investors’ interests in Egyptian tech stocks could be seen more in Fawry’s IPO, the interests particularly became clear and defined following the outbreak of the coronavirus pandemic.
The first day of trading in 2019 put Fawry’s market capitalisation at EGP 6 billion or $366 million.
But investors’ interests swung unsteadily thereafter, including dipping to the lowest of 7 Egyptian pounds per share in March 2020, before surging by over 300 percent resulting in a cap of EGP 16 billion or $1 billion or unicorn status (for the first time).
“FAWRY is…the only fintech company in the Egyptian stock market aligned with Egypt’s vision towards a cashless society,” Soliman said.
“The company’s stock performance, especially the increase in its price per share from IPO price EGP ~6/ share to current EGP ~40/share was aided by a number of factors. First, Egypt’s digital payments to GDP is 3% and government is aiming to increase this to 10% in 2–3 years. Second, the coronavirus pandemic now also accelerates the pace of digitization, especially the adoption of e-payments,” he said.
“Similar fintech companies could find an opportunity to list on the exchange, but similar record-setting performance of FAWRY is not guaranteed,” he said.
“If similar companies to FAWRY tried to list today, they may not perform like FAWRY because competitive landscapes change a lot…But still, IPO could be a way to go,” he concluded.
NB: 1 Egyptian Pound equals 0,064 United States Dollar, as at 11th May, 2021
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
The journey of a thousand miles begins with a single step! After twelve years of the startup journey, Cairo-headquartered fintech company Fawry has reached a unicorn status (that is, now worth over a billion dollar!), the first ever by any fintech startup in Egypt and the first ever by any African tech startup going through an IPO (Initial Public Offering) on African soil. Jumia, the Africa-focused ecommerce startup did this in 2019, but that was on the New York Stock Exchange. Interswitch, the Nigerian payment company, also did it last year, but it needed extra funding from VISA to make that happen.
CEO and co-founder Ashraf Sabry
This is a big win for the Egyptian-American Enterprise Fund (“EAEF”), Helios Investment Partners (“Helios”, acting on behalf of funds it advises) and the MENA Long-Term Value Fund (“MENA LTV”)which acquired 85 percent stake in Fawry in 2015 for approximately US$ 100 million.
Fawry Has Proven That African Startups Don’t Need To Look So Far Away For Their IPOs
Perhaps Fawry’s success on The Egyptian Exchange (EGX) would signal a new era for startups on the continent looking to exit through IPO. Jumia’s outing on the New York Stock Exchange still remains a subject of controversy, with Wall Street analysts painting very sad stories about the company, and Africa as a whole.
Fawry went public, last year, August, after monthsof hype, on The Egyptian Exchange (EGX) in first Egyptian IPO of the year. Fawry offered 36 percent (254.6 million) of its shares on The Egyptian Exchange to raise EGP 1.64 billion ($100 million). The offering also comprised of a secondary sale by Netherland Holding BV. The company’s shares that were listed at the price of EGP 6.46 soared 31 percent to close at EGP 8.48 on the first day of trading, which gave the company a market cap close to EGP 6 billion or $366 million. Since then, its stock price has increased by over 300 percent.
“The private placement was oversubscribed by 16 times and the IPO by 30 times. Egyptians represented 80.3% of the IPO and 50% of the private placement. Arabs & Foreigners represented 19.7% of the IPO and 49.3 of the private,” the Egyptian Exchange said in a statement during Fawry’s IPO in August, 2019.
The latest market cap of over $1 billion came as the company’s intraday trading saw its share price rise to EGP 22.69, resulting in a cap of EGP 16 billion or $1 billion (for the first time). This is remarkable because, with this, Fawry has become the first technology company in Egypt to get to the billion-dollar valuation as well as the first African tech startup to reach a unicorn status through IPO on African soil. Although, Fawry’s stock price fluctuated, the lowest it ever went was EGP 7 per share in March this year, following the outbreak of the coronavirus pandemic.
However, the coronavirus aided the company to achieve its latest status as demand for electronic payment services surged and Fawry being the leading player in Egypt led the gainers’ table. This is also evident from company’s just-announced financials for the second quarter of 2020.
The company reported that its revenue for the first half of 2020 increased by 47 percent (year-on-year) to EGP 549.26 million ($34.41 million) from EGP 373.33 million ($23.38 million) for the same period of 2019. During the said period, the company’s net profit in H1 2020 also increased by over 135 percent YoY to EGP 85.9 million ($5.38 million) from EGP 36.47 million ($2.29) in H1 2019.
A Deep Heave Of Relief For The 12 Year-old Company
Founded in 2008 by Ashraf Sabry & Mohamed Okasha, Fawry is the only technology company on The Egyptian Exchange and it currently offers over 250 electronic payment services through its network of over 105,000 service points across 300 cities in Egypt – that include ATMs, mobile wallets, retail shops, post offices, and little vendor kiosks.
The company also has its online payment gateway that allows online businesses to collect payments from their customers using different methods including cash, credit cards, and mobile wallet.
Fawry is, however, still working on entering the UAE market, which is expected to be completed by the end of 2020. This will be a breakthrough for the company, given that it will lead to accessing a lucrative payment infrastructure in the Gulf country.
“In 2008, I left my job and had limited time to convince investors that customers would trust paying their bills electronically at a grocery store. The challenge was establishing the company before my financial resources got depleted,” CEO and co-founder Ashraf Sabry said in an interview.
“Overcoming the challenge needed a thorough understanding of the business model, sharing experiences in other markets, committing to invest 80% of my personal financial resources in the same project and, finally, not giving up quickly. [This also involved] … trying to find new investors all the time, until I managed to convince the founder investors,” he added.
“The second challenge was convincing the first biller to join the network; I still remember, it was Vodafone,” he said. “The problem was that Vodafone had to allocate resources to develop the integration with their systems and had to introduce a new competitor to their valuable distribution network, so many of the stakeholders resisted the idea.
“I think I managed to overcome [that] … challenge by deciding to carry the cost of the implementation, to find a champion within Vodafone to support me, [putting together an] … appealing commercial deal and, most importantly, never giving up,” he further said.
“Other challenges include being almost bankrupt after three years, as well as attracting and retaining good people. I think the one factor in overcoming all challenges is, never give up and be persistent,” he concluded.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions. He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance. He is also an award-winning writer
