Private Equity Activity in Morocco: Growth and Performance Report Year 2015
March 2016 © 2015 Grant Thornton. All rights reserved.
1
Le Capital Investissement au Maroc – Année 2014
Private Equity in Morocco : Growth and Performance – Year 2015
© 2016 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
14
4.
Funds Under Management
16
5.
Investments
24
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecast 2016
42
10. Key Figures
46
11. Annexes
48 I.
Principal deals outside of AMIC’s perimeter
49
II.
Acronyms
50
III.
Glossary
51
Private Equity in Morocco : Growth and Performance – Year 2015
3
© 2016 Grant Thornton
1. SCOPE & METHODOLOGY
Scope This study includes : • All fund management companies which are members of AMIC with a local representative office in Morocco and have a portion of funds to invest dedicated to Morocco • Funds investing mainly in SMEs and unlisted companies • Limited Life Funds • Infrastructure Funds both with greenfield and brownfield investment • All investment sectors except funds dedicated to real estate and tourism
• Data collection was done via a survey of 22 management companies / 46 funds on a self reporting basis (including infrastructure funds)
Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
1. SCOPE & METHODOLOGY
Methodology CAPITAL RAISED • The amounts of funds raised only includes the part dedicated to Morocco and the part dedicated to Private Equity • Amounts raised by infrastructure funds are analyzed and presented separately • For transregional funds where the portion dedicated to Morocco has not been communicated, only actual amounts invested are reported • The review of statements of certain funds resulted in technical corrections to the amounts raised by year (hence differences from amounts presented in previous years) INVESTMENTS
• The amounts invested represent amounts disbursed • Detailed investment analysis does not include “Large Caps” (transaction over 200 mln MAD) as this new segment does not currently include a sufficient number of transactions EXITS AND PERFORMANCE • • • • •
Amounts exited are amounts of sales of investments IRRs represent gross IRRs upon exit as reported by the funds The scope of IRR calculations does not include partial exits or IRRs from investments of less than 1 year IRR were weighted by amounts invested Losses caused by exceptional events have note been taken into account in the average calculation of IRR
ECONOMIC AND SOCIAL IMPACT • The CAGR for turnover and employment were weighted by amounts invested Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
1. SCOPE & METHODOLOGY
Fund management companies
Funds
Fund management companies
Kantara LP THE ABRAAJ GROUP
ALMAMED ATLAMED
ATTIJARI INVEST
CFG Développement
CFG CAPITAL
Aureos Africa Fund
Funds Idraj
Africa Health Fund
ENTREPRISE PARTNERS
3P Fund
Anaf II
FIROGEST
Firo
Massinissa
HOLDAGRO
Targa
Massinissa Luxembourg
INFRA INVEST
Argan Infrastructure Fund
AM Invest Morocco
MPEF I
Agram Invest
MPEF II
Igrane
MAROC INVEST
MPEF III
Moroccan Infrastructure Fund
Africinvest I
AZUR PARTNERS
Nebetou Fund
Africinvest III
BMCI DEVELOPPEMENT
BMCI Développement
BROOKSTONE PARTNERS
CDG CAPITAL INFRASTRUCTURES
MITC CAPITAL
Emerald Fund MEDITERRANIA CAPITAL PARTNERS
MJT Park Inframed
PRIVATE EQUITY INITIATIVES
Inframaroc
UPLINE INVESTMENTS
Sindibad
PME Croissance
Upline Investment Fund
OIFFA VALORIS CAPITAL
Capital Morocco
New funds in 2015
Capital North Africa Venture Fund
Funds in divestment phase or divested
Note : Historical data of funds managed by Aureos, Sherpa and Viveris have been
Capital North Africa Venture Fund II Private Equity in Morocco : Growth and Performance – Year 2015
Mediterrania Capital II
Fonds Moussahama I et II
Cap Mezzanine Cap Mezzanine II
CAPITAL INVEST
Mediterrania Capital I
Upline Technologies
Accès Capital Atlantique CDG CAPITAL PRIVATE EQUITY
Maroc Numeric Fund
retained.
6
© 2016 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
14
4.
Funds Under Management
16
5.
Investments
24
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2016
42
10. Key Figures
46
11. Annexes
48 I.
Principal deals outside of AMIC’s perimeter
49
II.
Acronyms
50
III.
Glossary
51
Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
2. INTERNATIONAL AND NATIONAL ECONOMIC CONTEXT
Comments
Evolution of real GDP growth between 2013 and 2015 [%, 2013-2015]
5,0
4.7 4.4
4,5
4.4
4.4
4.0
4,0 3,5
.In 2015, the global economy continued to be pressured by weak growth with a growth rate of 3.1%
3.3 3.3
3,0
Growth in emerging and developing countries declined, while a modest recovery continued in Europe with a growth rate of 1.5% in 2015
3.1 2.6
2,5 2,0
1.5
1,5 1,0
In Morocco, economic growth in 2015 benefited from a satisfactory harvest and reached a rate of 4.4%. However, forecasts for 2016 are less optimistic
0.8
0,5 0,0 -0,5 -1,0
-0.5
World
Europe
Emerging Markets
Three major factors continue to influence the global outlook: • gradual slowdown of economic activity in China, • declining oil and commodities prices and, • gradual tightening of monetary policy in the US
Morocco
2013 2014 2015 Source : International Monetary Fund – Global Outlook January 2016
Weak global economic growth persists Two major challenges are present: increasing production and sustaining demand Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
2. INTERNATIONAL AND NATIONAL ECONOMIC CONTEXT
Comments
Historical trends and forecast [%, 2001-2017 forecasted]
Global growth should reach 3.4% in 2016 and 3.6% in 2017
10% 8% 6% 4.4%
5.0 % 4.7%
4%
3.3%
3.4%
2%
2.6% 0.8%
1.7%
0%
In emerging and developing markets, growth should slightly increase from 4% in 2015 to 4.3% in 2016 In Europe, growth is expected to remain more or less stable in 2016 and 2017, at around 1.7% Declining stimulate countries
- 2% - 4% - 6% 01
02
03
04
05
06
07
08
09
10
11
12
13
14
Eurozone
Morocco
World
Emerging markets and developing
15 16f
oil prices could further demand in oil-importing
For 2016, the IMF has predicted that GDP growth would reach 4.7% in Morocco. Due to low rainfall, the HCP lowered this estimate and anticipates a GDP growth rate of 1.3%
17f
Source : International Monetary Fund – Update of main projections January 2016
Global growth should reach 3.4% in 2016 and 3.6% in 2017 Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
2. INTERNATIONAL AND NATIONAL ECONOMIC CONTEXT
Private Equity penetration rate – capital invested/GDP (%) 0.08 1.95
1,8
0.06 1.59
1,6
1.45
1.41
1,4 1,2 1,0 0,8
Morocco
0.77 0.77
0,6 0,4
0.31 0.20 0.20
0.21
0,2
0.13 0.09
0.13
0.15 0.07
0.10
0.12
0.18 0.03 0.01
0.02 0.03
0,0
Israel
USA
2014*
2015
UK
S. Korea
India
Brazil
Sub Saharan Africa
China
South Africa
Turkey
MENA
Source: EMPEA, Industry Statistics Year-end 2015 *2014 data were updated in December 2015 by EMPEA
Morocco has, with a Private Equity penetration rate of 0.06% of GDP in 2015, continued to outperform all MENA region countries since 2013 Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
2. INTERNATIONAL AND NATIONAL ECONOMIC CONTEXT
Evolution of global amounts raised between 2001 and 2015 [Bln USD, 2001-2015] 653
666
+224% 551
541
495 431 348 315
296 220
228
208
170
141 101
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
Source: Preqin
Global fundraising has increased steadily over the last 5 years, increasing 11% between 2014 and 2015 Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
2. INTERNATIONAL AND NATIONAL ECONOMIC CONTEXT
Distribution of amounts raised worldwide in 2015
Europe
140 Bln $ North America
Asia
329 Bln $
57 Bln $
Rest of the world
23 Bln $
Source: Preqin
Private Equity in Morocco : Growth and Performance – Year 2015
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2. INTERNATIONAL AND NATIONAL ECONOMIC CONTEXT
1,000
GDP & real GDP growth
Inflation
Unemployment rate
[Bln MAD, %, 2011-2015]
[%, 2009-2015]
[%, 2009-2015]
805
873
828
896
953
1.9
1.8
6
9.1% 9.1% 8.9%
1.7
9%
9.2%
9.8% 9.2%
1.3 4
1.0
0.9
500
Ø1 0.4
2 0
0 2011
2012
GDP
2013
2014
2009
2015
2010
2011
2012 2013
2014 2015
2009
2010
2011 2012 2013 2014 2015
GDP Growth
Household consumption [Mln MAD, 2009-2015]
+11%
418
438
471
482
2009
2010
2011
2012
501
516
574
2013 2014 2015
Foreign Direct Investment
International ratings
[Bln MAD, 2009-2015]
Standard & Poor’s
32.0 25.0
2009
2010
26.0 29.0 27.7 28.5
2011
2012
31.1
BBB-/Stable
Fitch BBB-/Stable
2013 2014 2015
Sources: High Commission for Planning , MEF, Foreign Exchange Office
In 2015, Morocco recorded a growth rate of 4.4%. However, this rate is expected to significantly decrease in 2016 due to low rainfall and dependence of the Moroccan economy on external factors such as growth in the Eurozone and the possible rise in oil prices. Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
14
4.
Funds Under Management
16
5.
Investments
24
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2016
42
10. Key Figures
46
11. Annexes
48 I.
Principal deals outside of AMIC’s perimeter
49
II.
Acronyms
50
III.
Glossary
51
Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
3. FUND MANAGEMENT COMPANIES
Distribution of the capital of fund management companies
Investment committees (in number)
3%
4%
5%
23%
29%
27%
33% 17%
32%
29% 40%
48%
2013
31% 41%
38%
2014
2015
Internal comittees only Comittees with some investors or experts Comittees with systematic presence of investors
Financial institutions
Individuals
Management teams
Investment companies
Private holdings
Others*
*Funds of funds, Caisses de dépôts, government agencies
Number of fund management companies : 22 including 4 dedicated to infrastructure Discretionary management : 62% Average staffing (including Infra) : 6 including 4.2 working on investing activities and 1.8 in support Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
14
4.
Funds Under Management
16
5.
Investments
24
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2016
42
10. Key Figures
46
11. Annexes
48 I.
Principal deals outside of AMIC’s perimeter
49
II.
Acronyms
50
III.
Glossary
51
Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
4. FUNDS UNDER MANAGEMENT
Distribution of funds by legal form (in number) 5% 8%
5% 7%
4% 7%
4% 9%
13%
12%
11%
11%
42%
40%
39%
37%
34%
32%
36%
39%
39%
End of 2011
End of 2012
End of 2013
6%
3% 14%
43%
End of 2014
End of 2015
SCA: Société en Commandite par Actions, a partnership limited by shares OPCC: Special venture capital funds vehicle created by Law 18-14 – Organisme de Placement Collectif en Capital SAS : Société par Actions Simplifée, equivalent to Limited Liability Company (LLC) SA : Société Anonyme, equivalent to standard Corporation in common law Foreign
At the end of 2015, the vast majority of funds continue to use either foreign or the SA legal forms With the enactment of Law n°18-14 relative to Collective Investment in Capital Schemes (OPCC), this legal form should substantially increase in the future Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
4. FUNDS UNDER MANAGEMENT
Funds country of domicile (as % of value) End of 2015
14%
Per fund generation
20%
15%
18%
17%
18%
19% 26% 50%
47%
57%
34%
34%
2006-2010
Rest of World
Europe
2011 onward
Morocco
2/3 of the 3rd generation funds (starting in 2011) are located offshore Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
4. FUNDS UNDER MANAGEMENT
Nature of funds (Private Equity and Infrastructure) As % of value
6%
37%
2% 3%
2% 3%
5%
5%
2% 3%
2% 3% 5%
33%
33%
4%
3% 2%
2% 10%
25%
35% 44%
63%
52%
End of 2012
58%
57%
56% 47%
End of 2013
Others captives
End of 2014
End of 2015
Investment companies
Private Equity in Morocco : Growth and Performance – Year 2015
2006-2010
State captives
19
Captives financial institutions
2011 onward
Independents
© 2016 Grant Thornton
4. FUNDS UNDER MANAGEMENT
Capital raised per year (Mln MAD) 3,078 2,839 Average funds raised including Infra (2010 – 2015): 1,704.3 Mln MAD
2,416
1,633 1,499
Average funds raised (2005 – 2009) : 991.2 Mln MAD
1,106
1,478
946
980
916
712 488
480
423
490
230
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Capital raised (including Infrastructure funds)
Total amounts raised since inception to end 2015 for Private Equity: 10.72 billion MAD Amounts raised in Morocco by infrastructure funds: 5.49 billion MAD Total amount raised by all funds: 16.43 billion MAD Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
4. FUNDS UNDER MANAGEMENT
Capital raised by fund type (Mln MAD) 1.361
903
960
946 850
825 808
596 314 173
146
2006
2007
2008
2009
90 2011
2010
490
423
393 66 2012
117 2013
2014
2015
5%
Moroccan funds Transregional funds
95%
95% of funds raised for Morocco over the period 2013 – 2015 were transregional Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
4. FUNDS UNDER MANAGEMENT
Capital raised by investor type (excluding infrastructure funds) As % of value 4%
3% 7%
5%
7%
9%
15%
8%
10%
20%
3% 1%
18%
4%
38%
1%
41%
6% 8%
33%
7% 9%
12%
1%
20%
79%
77%
30%
6%
9%
56%
2006-2010
2011 onward
30%
21%
2011
25%
55%
4%
2%
16%
2012
2013
2014
2015
Pension funds
Banks and asset management companies
Others*
State and public organizations
Insurance companies
International development organizations
Investment vehicles** * Others: individuals, private companies ** Investment vehicles: funds of funds, holdings, investment companies
The share of international development organizations (IFC, EBRD, EIB and others) has increased significantly with the 3rd generation funds Private Equity in Morocco : Growth and Performance – Year 2015
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4. FUNDS UNDER MANAGEMENT
Capital raised by investor nationality 13%
13%
Other countries* 14%
14%
EU Morocco
34%
53%
End of 2012
* Saudi Arabia, UAE, Kuwait, Tunisia, USA
41%
41%
40%
47%
45%
46%
End of 2013
End of 2014
End of 2015
End of 2015
36% 46%
64%
54%
International development organizations
Foreign capital
Other foreign investors
Moroccan capital Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
14
4.
Funds Under Management
16
5.
Investments
24
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2016
42
10. Key Figures
46
11. Annexes
48 I.
Principal deals outside of AMIC’s perimeter
49
II.
Acronyms
50
III.
Glossary
51
Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
5. INVESTMENTS
Evolution of invested and reinvested funds Number of new investments
Amounts invested and reinvested (in Mln MAD) 432
665
2009
80
2010
309
35
2011
170
112
2012
585
344
1,382
10
422
282
686
586
100
2013
696
607
89
2014
117
2015
606 Amounts reinvested
489
Amounts invested
12
21
15 8
6
17
14
11
Number of companies
Including large caps
The level of investment slightly declined in 2015 with 606 Mln MAD invested, including 11 new investments 166 companies invested since inception for a total of 5.5 Bln MAD Private Equity in Morocco : Growth and Performance – Year 2015
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5. INVESTMENTS
Location of invested companies End of 2015 (as % of value) Tangier - Tetouan 8%
2% 2% 2%
Rabat Salé 10 %
4% 7% 8%
65% Casablanca region
Fez - Boulemane 4%
10%
65%
Meknes - Tafilalet
Other regions*
Marrakech -Tensift - Al Haouz
Rabat - Salé - Zemmour - Zaer
Foreign
Tangier - Tetouan
Fez - Boulemane
Casablanca region
*Other regions : Chaouia-Ouardigha, Gharb-Chrarda-Beni-Hssen, Oriental, Souss-Massa-Draa
Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
5. INVESTMENTS
Location of invested companies By fund generation
By year 4% 4% 6%
1%
2% 6% 12%
9%
3% 7%
7%
8%
4% 4%
2%
13%
5% 2%
26% 20%
1%
4%
7% 8% 5%
27%
27%
3%
3%
8%
17%
3%
7% 2% 12% 11%
17% 3% 75% 60% 56%
75%
74%
72% 58%
60% 52%
52% 45%
2012
2013
2014
2015
2000 - 2005
Meknes - Tafilalet
Foreign
Fez - Boulemane
Tangier - Tetouan
Marrakech -Tensift - Al Haouz
Other regions*
Rabat - Salé - Zemmour - Zaer
Casablanca region
Private Equity in Morocco : Growth and Performance – Year 2015
27
2006 - 2010
2011 onward
*Other regions : Chaouia-Ouardigha, Gharb-Chrarda-Beni-Hssen, Oriental, Souss-Massa-Draa
© 2016 Grant Thornton
5. INVESTMENTS
Sectors of invested companies By fund generation 1%
2%
5%
1%
End of 2015 5%
7% 1%
2% 1% 3%
11% 4%
13% 10%
6%
22%
17%
25%
12%
13% 30% 22%
11%
24%
22%
2006 - 2010
2011 onward
15%
15%
Primary
ICT
Construction sector
Auto industry
Trade and distribution
Other industries*
Chemical industry
Agribusiness
Services and transport
*Health, Packaging, Aerospace, and others
The industrial sector represents 48% of investments made since 2011 Services and transport sector ranks second with 22% of investments Private Equity in Morocco : Growth and Performance – Year 2015
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5. INVESTMENTS
Invested companies by development stage (as % of value) By funds generation
4%
End of 2015
2%
2%
1%
8% 5% 7%
60% 73%
19% 68%
25% 14% 9%
2006 - 2010
3%
2011 onward
Seed
Venture
Growth
Buy out
Turn around
2/3 of investments have been in companies in the growth stage Private Equity in Morocco : Growth and Performance – Year 2015
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5. INVESTMENTS
Companies funded by percent of capital acquired 2% 11%
8% 22%
6%
15% 8%
32% 16%
60%
47%
15% 2000 - 2005
More than 67%
46%
8%
5%
2006 - 2010
2011 onward
50 - 67
34 - 50
5 - 34
<5
The share of majority transactions declined significantly (from 30 to 17%) between 2nd and 3rd generation funds in conjunction with the decrease in buy out investments Private Equity in Morocco : Growth and Performance â&#x20AC;&#x201C; Year 2015
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5. INVESTMENTS
Companies funded by transaction size By fund generation
By year
24% 47%
50%
18% 29%
28% 9%
6% 7% 18%
9%
8%
7%
22% 11%
18% 12%
13%
21%
17% 7% 18% 13%
30%
17%
46%
10%
10%
12%
14%
10%
36%
7% 13%
17%
2011
2012
27%
24%
2013 0 to 10 mln MAD
18%
2014 10 to 20
2015
2006 - 2010
20 to 30
30 to 40
40 to 50
2011 onward
More than 50
The investment trend of the last generation of funds is towards larger transactions (41% over 40 mln MAD) and continued investment in the seed/venture stage Private Equity in Morocco : Growth and Performance â&#x20AC;&#x201C; Year 2015
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5. INVESTMENTS
Average ticket size of new investments (Mln MAD per year)
43
44
34
29
Ø33
28 20
2010
2011
2012
2013
2014
2015
The average ticket size invested between 2010 and 2015 is 33 mln MAD, which has sharply increased with the 3rd generation funds Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
14
4.
Funds Under Management
16
5.
Investments
24
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2016
42
10. Key Figures
46
11. Annexes
48 I.
Principal deals outside of AMIC’s perimeter
49
II.
Acronyms
50
III.
Glossary
51
Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
6. EXITS
Evolution of exits as % of value (Mln MAD) By year
By fund generation 360
1,115
874
268
186* 148 99
*
81 181 35
2009
2010
2011
2012
2013
2014
2000 - 2005
2015
2006 - 2011
2011 onward
* 3 undisclosed amounts
Exits were up 84% compared to 2014 Since inception, the total amount exited reached 2.2 bln MAD, representing 40% of the overall amount invested by the Private Equity industry Private Equity in Morocco : Growth and Performance â&#x20AC;&#x201C; Year 2015
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6. EXITS
Types of exits by fund generation As % of value
In number 4%
3%
9%
11%
9%
6% 22%
17% 42%
9%
63%
24% 17% 31%
18%
41% 26% 23%
25%
2005 - 2010
2011 onward
2005 - 2010
2011 onward
Loss realized
Private equity buyers
IPO or sale of shares
Repayments
Management
Industrials (Trade sales)
Accumulated amounts exited: 2.2 Bln MAD Number of exits: 91 Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
14
4.
Funds Under Management
16
5.
Investments
24
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2016
42
10. Key Figures
46
11. Annexes
48 I.
Principal deals outside of AMIC’s perimeter
49
II.
Acronyms
50
III.
Glossary
51
Private Equity in Morocco : Growth and Performance – Year 2015
36
© 2016 Grant Thornton
7. PRIVATE EQUITY PERFORMANCE
Gross Internal Rate of Return (IRR)* & Multiple
Unweighted average IRR per quartile
2000 - 2015 44%
2.0 x 13 %
16%
5% Gross IRR
-15%
Global multiple
nd 1st Quartile 2 Quartile
3rd Quartile
4th Quartile
* Average Gross IRR on exits (Cf. Methodology)
Weighted average IRR at end of 2015: 13% Average multiple (unweighted) : 2.0 (Seed - Venture : 1.2 / Growth : 2.6 / Buy out : 1.5)
Average investment length: 6.0 years Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
14
4.
Funds Under Management
16
5.
Investments
24
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2016
42
10. Key Figures
46
11. Annexes
48 I.
Principal deals outside of AMIC’s perimeter
49
II.
Acronyms
50
III.
Glossary
51
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8. PRIVATE EQUITY ECONOMY AND SOCIAL IMPACT
Turnover growth and employment growth of invested companies (by end 2015) Employment CAGR by the end of 2015* = 4.9 %
Turnover CAGR (compound annual growth rate) of invested companies by the end of 2015* = 17.6 %
CAGR by end of 2014 = 4.2 % CAGR by end of 2013 = 7.7 %
CAGR by end of 2014 = 15.4 % CAGR by end of 2013 = 13.8 % * Based on data of 72 invested companies and still in portfolio
Turnover CAGR by development stage
Employment CAGR by development stage 19%
69%
14
14
44
19%
5%
1%
0,3%
Buy out / Turn around
Growth
Seed / Venture
Turnover CAGR by sector
Buy out
Growth
Seed / Venture
38% 17%
9%
12%
11
4
Other industries
ICT
14%
14%
10
12
Agribusiness Trade and distribution
12 Construction BTP
18
Services
X Number of companies by sector / category Private Equity in Morocco : Growth and Performance – Year 2015
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8. PRIVATE EQUITY ECONOMY AND SOCIAL IMPACT
Annual training plan
Strategic workforce planning
Code of ethics
46%
67%
54%
31% 17% 22%
At time of acquisition
End of 2014
Actions engaging the company in social activities
At time of acquisition
End of 2014
At time of acquisition
End of 2014
Actions for environmental protection
27%
28%
13% 12%
At time of acquisition
End of 2014
At time of acquisition
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End of 2014
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8. PRIVATE EQUITY ECONOMY AND SOCIAL IMPACT
Company audit 99%
Oversight and steering committees
Reporting tools 98%
97%
62% 33%
32%
At time of acquisition
End of 2014
Performance indicators and scoreboards
At time of acquisition
End of 2014
End of 2014
Budgeting and budget monitoring policies 97%
97%
36%
At time of acquisition
At time of acquisition
34%
End of 2014
At time of acquisition
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End of 2014
© 2016 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
14
4.
Funds Under Management
16
5.
Investments
24
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2016
42
10. Key figures
46
11. Annexes
48 I.
Principal deals outside of AMIC’s perimeter
49
II.
Acronyms
50
III.
Glossary
51
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9. FORECASTS 2016
Main challenges for 2016
Priority investment areas (for transregional funds)
13% 27%
29% 27% 13%
20% 22%
22% 27%
Investing in new companies Fundraising
Morocco
Sub Saharan Africa
Managing underperforming companies
Tunisia
Algeria
Egypt
Identifying exits
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9. FORECASTS 2016
Planned fundraising for new funds
Planned exits for the majority of portfolio companies
33%
24%
24%
21% 18%
22%
22%
15% 17%
6%
S1 2016
S2 2016
S1 2017
S2 2017
Not planned
S1 2016
S2 2016
S1 2017
S2 2017
Not planned
Investments forecasts for 2016 by development stage in mln MAD* 899 683
125
91 Seed / Venture
Growth
Buy out
Total
* 9 management companies
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9. FORECASTS 2016
Investment sectors over the next 5 years
5%
4%
Investment regions over the next 5 years
13%
7% 10%
6%
6%
18%
11% 10% 16%
9% 10% 11% 9%
10% 9%
14%
9%
New technologies
Automobile Distribution
Energy
Consumer goods Services
Education
Transport and Logistics
Agribusiness Health
Telecom BTP
Private Equity in Morocco : Growth and Performance â&#x20AC;&#x201C; Year 2015
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15%
Casablanca
Marrakech
Agadir
Oujda
Rabat
Tangier
Fez
Laayoune
Š 2016 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
14
4.
Funds Under Management
16
5.
Investments
24
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2016
42
10. Key Figures
46
11. Annexes
48 I.
Principal deals outside of AMIC’s perimeter
49
II.
Acronyms
50
III.
Glossary
51
Private Equity in Morocco : Growth and Performance – Year 2015
46
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10. KEY FIGURES 2015
Funds raised
16.4 bln MAD raised by private equity and infrastructure funds
95 % funds raised since 2013 are by transregional funds
3.2 bln MAD still available for investment
Investments
5.5 bln MAD invested in 166 companies by the end of 2015
606 mln MAD invested in 2015
Average investment ticket = 44 mln MAD
Exits
Accumulated amounts exited = 2.1 bln MAD
58% of exits since 2011 are through trade sales or sale of shares (IPO)
Economic and social impact
97% of companies have implemented a complete system of governance
Employment CAGR = 4.9% Turnover CAGR = 17.6%
Performance
Weighted average gross IRR = 13%
Private Equity in Morocco : Growth and Performance â&#x20AC;&#x201C; Year 2015
Average investment time = 6.0 years
47
Average multiple = 2.0
Š 2016 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
14
4.
Funds Under Management
16
5.
Investments
24
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2016
42
10. Key Figures
46
11. Annexes
48 I.
Principal deals outside of AMIC’s perimeter
49
II.
Acronyms
50
III.
Glossary
51
52
Private Equity in Morocco : Growth and Performance – Year 2015
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© 2016 Grant Thornton
11. ANNEXE I – Principal deals outside of AMIC’s perimeter
Investment company
Operation
Swicorp
Investment in the capital of Venezia Ice Injection of 125 mln MAD via the Intaj II fund
TPG Growth SATYA Capital Limited
Investment in Yassamine schools, up to 250 mln MAD
Blue Mango Capital
Investment in Menara clinic in Marrakech, a center specialized in oncology and radiology
Saham & Tana Africa Cap
Investment in the primary and secondary education sector via a new entity: Sana Education
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11. ANNEXE II – ACRONYMS
Bln MAD CAGR EBRD EIB EMPEA GDP ICT IFC IPO IRR MEF Mln MAD OPCC
Billions of Moroccan dirhams Compound Annual Growth Rate European Bank for Reconstruction and Development European Investment Bank Emerging Markets Private Equity Association Gross Domestic Product Information and Communications Technology International Finance Corporation Initial Public Offering Internal Rate of Return Ministry of Economy and Finance Millions of Moroccan dirhams Organisme de Placement Collectif en Capital : Collective Investment in Capital Scheme
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11. ANNEXE III – GLOSSARY
Buy out Capital (transmission capital): Transmission capital investments in management or owner succession aimed buyouts in mature firms. Discretionary Management: Classic private equity structure where individual investment decisions are in the hands of the management team. Exit Amount: Exit valued at proceeds of sale of investment in the enterprise. Exit Mode: Management Share by-back from PE investor by management of the enterprise. Funds of Funds: A fund raising funds from multiple sources for investment in a diverse number of private equity funds. Growth Capital (late stage venture capital): Investment in equity and quasi-equity in order to finance the development of a business or the acquisition of new stocks. The business partner is a company established in its markets, profitable and having significant growth prospects. Frequently called Growth Venture Capital. IRR (Internal Rate of Return): Measurement of the average annualized rate of return of an investment consisting of negative flows (cash outflows) and positive flows (cash inflows). It is used to measure and monitor performance of private equity transactions. Invested Capital: Capital invested in enterprises by venture or private equity fund companies. Multiple: Investment Multiple = Proceeds of sale / Invested amount. Private Equity in Morocco : Growth and Performance – Year 2015
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11. ANNEXE III – GLOSSARY
Private Equity Fund: An investment vehicle that raises capital from a diverse group of investors with a view to investing in unlisted private firms and realizing capital gains shared among investors. Quartile: Division of the quartiles are the values that share a set of values into four equal parts. Thus, in the distribution of IRR for example, the first quartile is the IRR below which lie 25% of IRRs.
Quasi Equity: Financing vehicles that combine both debt and equity characteristic. Raised Capital: Confirmed investment commitments in venture or private equity funds. Seed Capital: Seed Capital investors bring, along with equity, a professional network and personal experience in early stage entrepreneurial projects that are still in development. Small and Mid Caps: The definition of small and mid caps varies depending on the maturity of the markets. In Morocco, AMIC considers that the investments “Small and Mid Caps” correspond to transactions less than 200 mln MAD Transregional Funds: Funds targeting several investment geographies at the country level (in contrast to ‘regional’ funds within Morocco focused on regional investment within Morocco alone) Venture Capital (early stage): Equity or quasi equity in young enterprises and start-ups.
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Founded in 2000, AMIC (the Moroccan Private Equity Association) is an independent professional association whose mission is to unite, represent and promote the private equity profession to local and international investors, entrepreneurs and governmental bodies. AMIC's main mission is to strengthen the private equity industryâ&#x20AC;&#x2122;s competitiveness in Morocco and abroad via: - Effective and clear communication about the private equity industry
Fidaroc Grant Thornton is a leading audit and consultancy firm in Morocco, and member of the Grant Thornton International, a global leader in consulting and auditing (38 500 employees, 130 countries). For over twenty years, Fidaroc Grant Thornton has supported its clients by setting a priority to listen to them and deliver creative services value. Fidaroc Grant Thornton operates in the following areas: Auditing-Statutory Auditor
- Executing reliable reports and surveys on the state of Private Equity in Morocco - Active participation in discussions on any draft law regulating the sector - Establishing a good governance and ethics code for the Private Equity industry and promoting compliance with this code - Providing support services to members on regulatory issues related to the profession
Advisory -
IFRS / Consolidation Transaction and valuation services Actuarial Management of fixed assets Business Risk Services Research and strategy Organisation Information system Improvement of the performance Certification/Categorization
Legal, tax and social services advisory - Development of a quality training program touching on all industry fundamental skills.
Site Web : www.amic.org.ma Private Equity in Morocco : Growth and Performance â&#x20AC;&#x201C; Year 2015
Outsourcing accounting and social services support
Site Web : www.fidarocgt.com Š 2016 Grant Thornton