Klivvr, a fintech and e-payment company under Orascom Financial Holding Group, has ambitious plans to become a full-fledged digital bank that caters to the needs of small and medium enterprises (SMEs) in Egypt. The company aims to transform into a major retail institution within the next seven years.
The company offers a free prepaid card through its Klivvr app, which can be used for online and offline purchases and withdrawals, both locally and internationally.
Niles Bechtler, the Managing Director of Orascom Financial Holding and the Chairperson of Klivvr, told Daily News Egypt that SMEs are a vital component of the Egyptian economy and a large potential market for the company. He said that Klivvr is looking for a suitable partner to apply for a digital bank license from the Central Bank of Egypt (CBE) for the SME category.
He added that SMEs face many challenges in accessing financing and other services from traditional banks and that Klivvr can provide them with fast and flexible solutions tailored to their needs.
Bechtler revealed that Klivvr is in talks with several banks and financial institutions, both foreign and local, to choose the best partner for the license application. He said that if the partner is an Egyptian bank, it will be one with a weak retail sector.
According to the CBE, the minimum capital requirement for a digital bank that serves all segments except large corporations is EGP 2bn, and the largest shareholder must be a financial institution with at least 30% of the total capital and a proven track record in similar activities.
Bechtler expected that the first digital bank, apart from Banque Misr, would be launched within two years, as the CBE takes about 15 months to process the applications.
He also said that Klivvr’s plans are not affected by the possible acquisition of Orascom Financial by B Investments. He praised the state’s efforts to promote financial inclusion and fintech in the Egyptian economy.
B Investments to acquire Orascom Financial
Last June, B Investments, a leading private equity firm, decided to take over Orascom Financial. The deal will be done through a share swap, where one B Investments share will be exchanged for 56.76 Orascom Financial shares, excluding treasury shares. An independent financial advisor will be appointed to determine the fair value of the shares involved in the deal.
Klivvr, which is 80% owned by Orascom Financial and 20% by Accel, a global venture capital firm, has a paid-up capital of more than EGP 100m. The company offers a free prepaid card through its Klivvr app, which can be used for online and offline transactions and withdrawals, both locally and internationally.
Bechtler said that the company raises its capital annually by EGP 200m, and plans to increase it by another EGP 200m for old shareholders. He also said that the company may welcome a new investor in the future, but not at the moment.
He also said that Klivvr’s plans are not affected by the possible acquisition of Orascom Financial by B Investments.
Bechtler said that Klivvr’s investment plan for the next three years includes expanding its innovative services based on fintech and launching a new service at least every month. He said that the company aims to build a culture of savings and investment among its users. He said that the company has already launched a savings product called Saving Yard, and plans to launch investment services through the app within two months. He declined to reveal the nature of the investment.
He said that the company is open to partnerships to strengthen its business model and offer new and diverse services in the Egyptian market, such as the recent partnership with Visa to launch its digital payment card.
Regarding Orascom Financial’s plan to launch a venture capital fund, Bechtler said that the matter depends on the outcome of the acquisition by B Investments, and that the shareholders will decide on it once the deal is completed.
Regarding the recent caution of venture capital to invest in startups, Bechtler said that the nature of venture capital is to take more risks for higher returns and that the future of startups has cycles, where some succeed and some fail. He said that venture capital investors know that most of the startups they invest in will not survive after 3-4 years, but they also know that one successful startup can compensate for the losses of many others.
He said that Klivvr is not hesitant to invest despite the challenging economic situation, as investments lead to growth. He said that times of crisis can be an opportunity to establish a successful investment entity and attract good opportunities.
