Peptidase involved in the biosynthesis of the enzyme cofactor mycofactocin (MFT) (PubMed:33014324). Catalyzes cleavage of the MftC-modified MftA peptide to liberate its final two residues, which consist of a cross-linked valine-decarboxylated tyrosine dipeptide (named 3-amino-5-[(4-hydroxyphenyl)methyl]-4,4-dimethyl-2-pyrrolidin-2-one or ADHP) (PubMed:30183269). Is required for the in vivo ethanol assimilation in M.smegmatis (PubMed:31113891). [mycofactocin precursor peptide]-C-terminal glycyl-N-{5-[(4-hydroxyphenyl)methyl]-4,4-dimethyl-2-oxopyrrolidin-3-yl}acetamide + H2O = 3-amino-5-[(4-hydroxyphenyl)methyl]-4,4-dimethyl-2-pyrrolidin-2-one + [mycofactocin precursor peptide]-C-terminal glycine MftE appears to bind one Fe(2+) and one Zn(2+) ion per subunit. Fe(2+) seems to be catalytically active while Zn(2+) could play an auxiliary role. Homooctamer. Cells lacking this gene present delayed growth in ethanol as the sole growth substrate (PubMed:31113891). Glycosylated mycofactocins are produced in this mutant, albeit in significantly lower amounts than wild type. MtfE can likely be complemented by an unknown peptidase present in the metabolic background of mycobacteria (PubMed:33014324). Belongs to the creatininase superfamily. Was originally thought to cleave the C-terminal dipeptide from the first intermediate product formed by the action of MftC on MftA, i.e. MftA modified with a C-terminal glycyl-L-valyl-decarboxylated L-tyrosine (PubMed:28077628). However, it was later shown that the terminal product formed by the action of MftC on MftA is the true substrate of MftE, i.e. MftA modified with a C-terminal glycyl-3-amino-5-[(4-hydroxyphenyl)methyl]-4,4-dimethylpyrrolidin-2-one (PubMed:30183269). Truncated N-terminus.