Private Equity: more than 1.86 billion dirhams raised in 2021

Headquarters of Fidaroc Grant Thornton and Grant Thonrton Conseil in Casablanca. Credit: The Desk

Fundraising by management companies, members of the Moroccan Association of Capital Investors (AMIC), reached a record level of 1.867 billion dirhams (MMDH) for the 2021 financial year, an increase of nearly 40% year-on-year, said Tarik Haddi, President of AMIC, on Tuesday.

These capital raisings were carried out by 4 funds dedicated to transregional investment, Haddi said during a press conference devoted to the presentation of the Activity Report of Moroccan private equity players, noting that this category of funds is monopolizes 80% of fundraising for Morocco since 2012.

The share of international development organizations has risen sharply since the first generation of funds (2000-2005), notes AMIC, adding that the share of Moroccan investors has fallen sharply between the first and fourth generation of funds, going from 73% of fundraising over the 2000-2005 period to 37% over the 2017-2021 period.

In 2021, the investments made by 12 management companies amounted to 1.152 billion dirhams, relating to 22 new companies invested and 8 reinvestments. With 32% of investments made in 2021, the industrial sector still takes first place, while that of services and transport comes in second place and records an increase of 18% to 31% over the period 2017-2021.

More than 71% of investments are made in the Casablanca-Settat region and 9% in the Rabat-Salé-Kenitra region, specifies AMIC.

For their part, Seed and Venture Capital investments represent 32% of the investments made in number and 7% in value, observes the Association, adding that their shares have gone from 26% over the period 2006-2011 to 48% over the period 2017-2021 (in number).

AMIC also notes an increase in the number of transactions of less than 20 million dirhams (MDH), between the 3rd and 4th generation of funds, thanks to the development of seed/risk activity.

The size of the funds has made it possible to double, over two generations, the average investment tickets for development and transmission, going from 55 MDH (2012 – 2016) to 99 MMAD (2017 – 2021). The average ticket for companies in the seed/risk stage is around 8.6 MMAD over the period 2017–2021. With 4 acts of divestment, outflows for the year 2021 amounted to 882 MDH. This result is the second record after 2017 (968 MDH) for outings over the past 10 years.

At the end of 2021, the funds carried out 136 divestments. Exits on the secondary market represent 37% of the amounts disinvested, followed by exits from manufacturers which represent 28%, then stock market exits which represent 18%.

In terms of performance, the average gross internal rate of return (IRR) calculated on the basis of 91 effective disposals was 13% over the period from 2000 to 2021. The overall multiple for the sector is 2 (1.2 for initiation/risk – 2.3 for development and 1.8 for transmission).

In addition, AMIC points out that the average holding period for investments is 6.1 years. The health, services and construction sectors show the highest IRRs with 26%, 18% and 17% respectively.

AMIC’s activity report is produced for the 14th consecutive year by the Cabinet Grant Thornton under the leadership of AMIC’s Studies & Statistics Commission. The activity report covers a scope of 28 management companies (including funds) and 60 funds (16 assets, the others in the disinvestment phase or disinvested), and thus represents almost all the management companies having an office in Morocco.

AMIC brings together the majority of Capital Investment structures (Venture Capital, Development Capital, Capital Transmission / LBO, Turnaround Capital) established in Morocco. Professional shareholders, the 28 active members of the association support and finance the growth of more than 240 Moroccan companies. AMIC also has 23 associate members representing businesses who support and advise investors and entrepreneurs in setting up and managing their partnerships.

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