Private Equity Activity in Morocco: Growth and Performance
Year 2016 February 2017 © 2017 Grant Thornton. All rights reserved.
1
Le Capital Investissement au Maroc – Année 2016
Private Equity Report – AMIC 2016
© 2017 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
13
4.
Funds Under Management
15
5.
Investments
23
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecast 2017
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 Report – AMIC 2016
3
© 2017 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 21 management companies / 40 funds on a self reporting basis (including infrastructure funds)
Private Equity Report – AMIC 2016
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© 2017 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 Report – AMIC 2016
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© 2017 Grant Thornton
1. SCOPE & METHODOLOGY
Fund management companies Funds
Fund management companies
MPEF I MPEF II AFRIC INVEST
Capital Morocco CAPITAL INVEST
MPEF III
ALMAMED ATLAMED
Massinissa Massinissa Luxembourg AM Invest Morocco Agram Invest
ATTIJARI INVEST
AZUR PARTNERS
Nebetou Fund
BMCI DEVELOPPEMENT
BMCI Développement
BROOKSTONE PARTNERS CDG CAPITAL INFRASTRUCTURES
MJT Park Inframed
Idraj 3P Fund
FIROGEST
Firo
GLOBAL NEXUS
Global Nexus Fund Temporis Global Nexus
HOLDAGRO
Targa
INFRA INVEST
Argan Infrastructure Fund
MEDITERRANIA CAPITAL PARTNERS
Mediterrania Capital I
MITC CAPITAL
Maroc Numeric Fund
PRIVATE EQUITY INITIATIVES
PME Croissance
Mediterrania Capital II
Upline Technologies
Inframaroc UPLINE INVESTMENTS
Upline Investment Fund
Sindibad
Fonds Moussahama I et II
Cap Mezzanine
OIFFA
Cap Mezzanine II
VALORIS CAPITAL New funds in 2016 Funds in divestment phase or divested
NB: Historical data of funds managed by The Abraaj Group, Aureos, Dayam and Viveris have been retained. Private Equity Report – AMIC 2016
CFG Développement
ENTREPRISE PARTNERS
Emerald Fund
Accès Capital Atlantique CDG CAPITAL PRIVATE EQUITY
CFG CAPITAL
Igrane Moroccan Infrastructure Fund
Capital North Africa Venture Fund Capital North Africa Venture Fund II
Africinvest I Africinvest III
Funds
6
© 2017 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
13
4.
Funds Under Management
15
5.
Investments
23
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2017
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 Report – AMIC 2016
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© 2017 Grant Thornton
2. INTERNATIONAL AND NATIONAL ECONOMIC CONTEXT
Comments
GDP historical trends and forecast [%, 2001-2018 forecasted]
After a relatively difficult 2016, global growth is expected to accelerate in the coming years, reaching 3.4% in 2017 and 3.6% in 2018.
10% 8% 6% 4%
4.1% 4.5%
4.8 %
3.6%
3.6%
3.4%
3.5%
3.1% 1.7%
2%
1.5% 1.6%
This growth will mainly be supported by economic activity in emerging countries where growth forecast is estimated at 4.5% in 2017 and 4.8% in 2018.
1.1%
0%
In Europe, with the Brexit and the uncertainties associated with the result of the US elections, growth is expected to remain weak and decline from 1.7% in 2016 to 1.5% in 2018.
- 2% - 4% - 6% 01
02
03
04
05
06
07
08
09
10
11
12
13
14
Euro Zone
Morocco
World
Emerging and developing markets
15
16
17f
18f
Due to a more promising harvest year, the HCP predicted that GDP growth in Morocco would reach 3.6% in 2017.
Sources: International Monetary Fund – Update of main projections January 2017 The World Bank HCP
According to the latest forecast, global growth is expected to accelerate to 3.4% in 2017 and 3.6% in 2018 Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
2. INTERNATIONAL AND NATIONAL ECONOMIC CONTEXT
Private Equity penetration rate – capital invested/GDP (%) 0.08% 0.07%
Maroc
1,8% 1,6% 1,4% 1,2% 1,0% 0,8% 0,6% 0,4% 0,2% 0,0%
UK
USA
2012-2016 average
Israel
India
S. Korea
Brazil
South Africa
China
Sub Saharan Turkey Africa
MENA
2016
Source: EMPEA, Industry Statistics Year-end 2016
Morocco has, with a Private Equity penetration rate of 0.08% of GDP in 2016, continued to outperform all MENA region countries since 2012 Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
2. INTERNATIONAL AND NATIONAL ECONOMIC CONTEXT
Evolution of global amounts raised between 2006 and 2016 [Bln USD, 2006-2016]
413
408
350
348
347 329
310
213
208
225
173
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Source: Preqin
Global fundraising has increased steadily since 2010. Funds raised have doubled between 2010 and 2016, but remain generally lower than before 2010 Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
2. INTERNATIONAL AND NATIONAL ECONOMIC CONTEXT
Evolution of amounts raised in Africa between 2011 and 2016 [Bln USD, 2011-2016]
2011-2016 in
:
4.3
Number of reported PE deals: 3.5
919 2.5 2.3
Total value of reported PE deals:
2.0
1.9
22.7 bln USD Total value of PE fundraising: 2011
2012
2013
2014
2015
2016
16.5 bln USD
Source: AVCA
The amounts of operations and investments remain stable compared to 2015, the African market confirms its attractiveness Private Equity Report – AMIC 2016
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2. INTERNATIONAL AND NATIONAL ECONOMIC CONTEXT
1,000
GDP & real GDP growth
Inflation
Unemployment rate
[Bln MAD, %, 2011-2016]
[%, 2010-2016]
[%, 2009-2016]
805
828
873
936
896
947
6
1.9
1.8
1.6
9.1% 9.1% 8.9% 9% 9.2%
1.6
9.9% 9.4% 9.7%
1.3
4
0.9
Ø1
500 2 0
0.4
0 2011
2012
PIB
2013
2014
2015
2016
2010
2011
2012 2013
2014 2015 2016
2009 2010 2011 2012 2013 2014 2015 2016
Croissance du PIB
Household consumption
Foreign Direct Investment
International ratings
[Mln MAD, 2009-2016]
[Bln MAD, 2009-2016]
Standard & Poor’s
418 438
485 508
534 553
567 581
2009 2010 2011 2012 2013 2014 2015 2016
32.0 25.0
26.0 23.5 27.7
29.9 31.8
BBB-/Stable
Fitch BBB-/Stable
22.8
2009 2010 2011 2012 2013 2014 2015 2016
Sources: HCP, MEF, Foreign Exchange Office
In 2016, Morocco recorded a growth rate of 1.1%. However, this rate is expected to increase in 2017 due to a promising harvest year and despite a decline in foreign demand. Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
13
4.
Funds Under Management
15
5.
Investments
23
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2017
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 Report – AMIC 2016
13
© 2017 Grant Thornton
3. FUND MANAGEMENT COMPANIES INCLUDING INFRA FUNDS
Distribution of the capital of fund management companies
Investment committees (in number)
3%
4%
5%
28%
33%
16% 42%
28% 29%
30% 44%
2011
38%
2016
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*
* Caisses de dépôts, Funds of funds, Government agencies
Number of fund management companies: 21 including 3 dedicated to infrastructure Discretionary management: 62% Average staffing (including Infra): 6 including 4.1 working on investing activities and 1.8 in support Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
13
4.
Funds Under Management
15
5.
Investments
23
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2017
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 Report – AMIC 2016
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© 2017 Grant Thornton
4. FUNDS UNDER MANAGEMENT
Distribution of funds by legal form (in number)
INCLUDING INFRA FUNDS
7% 38%
43%
43%
42%
33%
21% 40%
39%
37% 47%
57% 41% 34% 2000-2005
32%
36% 2006-2010
39%
13% 39% 2011 onward
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) Foreign SA : Société Anonyme, equivalent to standard Corporation in common law
From 2011, "Foreign" and "OPCC" legal forms represent 80% of the 3rd generation funds 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 Report – AMIC 2016
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© 2017 Grant Thornton
4. FUNDS UNDER MANAGEMENT
Funds country of domicile (as % of value)
INCLUDING INFRA FUNDS
End of 2016
20%
Per fund generation
17%
18%
30% 25% 26% 21%
47%
57%
49%
28%
2006-2010 Rest of World*
Europe
2011 onward
Morocco
* Rest of World: Mauritius, United States
The share of funds located in Morocco decreased with the 2nd and the 3rd generation of funds. Funds located offshore represent nearly 51% of the funds created since 2011. Private Equity Report – AMIC 2016
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4. FUNDS UNDER MANAGEMENT
Nature of funds
INCLUDING INFRA FUNDS
End of 2016 2%
1%
4%
3% 2%
1% 6%
4% 34% 44%
40%
53%
59% 47%
2006-2010
Others captives
Private Equity Report – AMIC 2016
Investment companies
State captives
18
Captives financial institutions
2011 onward
Independents
© 2017 Grant Thornton
4. FUNDS UNDER MANAGEMENT
Capital raised per year (Mln MAD) 1,633
3,078 1,478
2,839
2,416
946
916
980 488
480
450
481 305
2008
XXX
2009
2010
2011
2012
2013
2014
2015
2016
Capital raised (including Infrastructure funds)
Total amounts raised since inception to end 2016 for Private Equity: 11.1 bln MAD Amounts raised in Morocco by infrastructure funds: 5.5 bln MAD Total amount raised by all funds: 16.6 bln MAD Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
4. FUNDS UNDER MANAGEMENT
Capital raised by fund type (Mln MAD)
EXCLUDING INFRA FUNDS 1 361
903
960
946 850
825 808
596 314
2006
2007
2008
2009
481 255
173
146
450
393 90 2010
66
2011
Moroccan funds
2012
117 2013
50 2014
2015
2016
14%
Transregional funds
86%
86% of funds raised for Morocco over the period 2013 – 2016 were transregional Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
4. FUNDS UNDER MANAGEMENT
Capital raised by investor type
EXCLUDING INFRA FUNDS
As % of value 2%
6%
2%
8% 20%
3%
1%
3%
17%
9%
15%
38%
7%
4% 7% 18%
5% 10%
4%
33%
9%
18%
8%
7% 8%
2%
12%
38%
79%
9%
27%
21% 55% 2012
25% 25%
2006-2010
76%
21% 51%
30%
9%
2%
1%
7%
2011 onward
2013
2014
2015
2016
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 Report – AMIC 2016
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4. FUNDS UNDER MANAGEMENT
Capital raised by investor nationality 13%
14%
EXCLUDING INFRA FUNDS
Other countries* 15%
15%
15%
EU Morocco
34%
53%
End of 2012
* Kuwait, Saudi Arabia, Tunisia, UAE, USA
40%
40%
39%
39%
47%
45%
46%
46%
End of 2013
End of 2014
End of 2015
End of 2016
End of 2016
35% 46%
65%
54%
International development organizations
Foreign capital
Other foreign investors
Moroccan capital Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
13
4.
Funds Under Management
15
5.
Investments
23
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2017
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 Report – AMIC 2016
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© 2017 Grant Thornton
5. INVESTMENTS
Evolution of invested and reinvested funds Number of new investments
Amounts invested and reinvested (in mln MAD) 411
401 551
631 381
295 300
685
505
696
Amounts reinvested
2009
80
2010
86
2011
112
2012
180
607 434
562 786
188
10
716
21 15 6
2013
89
2014
127
2015
70
12
17 14 10
2016
Amounts invested
18
Number of companies
The level of investment increased by 40% in 2016 with 786 mln MAD invested, including 18 new investments 183 companies invested since inception for a total of 6.3 bln MAD Private Equity Report – AMIC 2016
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5. INVESTMENTS
Location of invested companies End of 2016 (as % of value)
Tangier – Tétouan – Al Hoceima 6%
3% 3%
Rabat - Salé - Kénitra 10 %
5% 5%
Casablanca - Settat 68 %
6%
5%
Fez - Meknès
Marrakech – Safi 5%
10% 68%
Marrakech - Safi
Casablanca - Settat Rabat - Salé - Kénitra
Other regions*
Tangier - Tetouan - Al Hoceima
Foreign
Fez - Meknes * Other regions: Béni Mellal- Khénifra, Dakhla-Oued Eddahab, Darâa - Tafilalet, Guelmim - Oued Noun, Laâyoune - Sakia El Hamra, The Oriental, Souss - Massa
Private Equity Report – AMIC 2016
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5. INVESTMENTS
Location of invested companies By year 5%
Per fund generation 7% 7%
1%
3%
1%
24%
7%
11%
4% 4% 13%
9%
4% 1%
4%
8%
2%
9% 7%
25%
14%
4% 7% 7%
8%
23%
20%
27%
85% 78% 67%
62% 53% 56%
2013
68%
66%
2006-2010
2011 onward
75%
60% 52%
2014
2015
2016
2000-2005
Marrakech - Safi
Casablanca - Settat Rabat - Salé - Kénitra
Other regions*
Tangier - Tetouan - Al Hoceima
Foreign
* Other regions: Béni Mellal- Khénifra, Dakhla-Oued Eddahab, Darâa - Tafilalet, Guelmim - Oued Noun, Laâyoune - Sakia El Hamra, The Oriental, Souss - Massa
Fez - Meknes Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
5. INVESTMENTS
Sectors of invested companies End of 2016
By fund generation 3%
1%
1%
7%
4%
1% 8%
24%
5%
13%
2%
4% 4%
2%
10% 8%
25%
16%
14%
13% 22%
11%
11%
13%
Primary
ICT
Construction sector
Auto industry
Trade and distribution
Other industries*
Chemical industry
Agribusiness
Services and transport
Private Equity Report – AMIC 2016
29%
27
24%
24%
2006-2010
2011 onward
* Aerospace, Education, Health, Packaging and others
Š 2017 Grant Thornton
5. INVESTMENTS
Invested companies by development stage (as % of value) End of 2016
By funds generation
1% 1% 1%
2%
4%
7%
6%
18% 69% 78%
74%
24% 13%
2%
1%
2011 onward
2006-2010
Seed
Venture
Growth
Buy out
Turn around
Investment in companies in the growth stage represents 78% of total investments made since 2011 Private Equity Report – AMIC 2016
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5. INVESTMENTS
Companies funded by percent of capital acquired 2% 8%
8%
5%
22% 15% 9%
38% 16%
60%
47%
44%
15% 2000-2005
More than 67%
6%
5%
2006 - 2010
2011 onward
50 - 67
34 - 50
5 - 34
<5
The share of majority transactions declined significantly: almost 87% of transactions are minority positions as of 2011 Private Equity Report â&#x20AC;&#x201C; AMIC 2016
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5. INVESTMENTS
Companies funded by transaction size By fund generation
By year
17%
19% 27%
20% 36%
33%
40%
33% 10% 13%
20% 14%
6%
9%
6% 21%
13%
20%
6%
16%
10%
17% 20%
14%
50%
19%
10% 13%
33%
29%
29% 21%
20%
13%
2012
12%
10%
2013
2014 0 to 10 mln MAD
2015
10 to 20
2011 onward
2006 - 2010
2016
20 to 30
30 to 40
40 to 50
More than 50
Significant increase in the number of transactions of more than 40 mln MAD between the 2nd and 3rd generation (from 29% to 40%) and continued investment (40%) in the seed / venture stage Private Equity Report â&#x20AC;&#x201C; AMIC 2016
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5. INVESTMENTS
Average ticket size of new investments (Mln MAD per year)
43
44
40
34
Ø35
28 20
2011
2012
2013
2014
2015
2016
The average ticket size invested between 2011 and 2016 is 35 mln MAD, which has sharply increased with the 3rd generation funds Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
5. INVESTMENTS
Average ticket size of new investments (Mln MAD per stage and per generation) Seed / Venture 9 8
5
2000-2005
2006-2010
2011 onward
Growth / Buy out / Turn around 50 43 24
2000-2005
2006-2010
2011 onward
The average investment ticket doubled between the 1st and 3rd generation of funds rising from 5 to 9 mln MAD for the seed / venture and from 24 to 50 mln MAD for growth / buy out / turn around Private Equity Report â&#x20AC;&#x201C; AMIC 2016
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Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
13
4.
Funds Under Management
15
5.
Investments
23
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2017
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 Report – AMIC 2016
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© 2017 Grant Thornton
6. EXITS
Evolution of exits as % of value (Mln MAD) By year
By fund generation
360
1,126
1,136
268
205 186
148 *
99 81
2010
2011
2012
2013
181
2014
2015
2000-2005
2016
2006-2010
2011 onward
Exits were up 10% compared to 2015 Since inception, the total amount exited reached 2.4 bln MAD, representing 38% of the overall amount invested by the Private Equity industry Private Equity Report â&#x20AC;&#x201C; AMIC 2016
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6. EXITS
Types of exits by fund generation As % of value 3%
In number 4%
8%
8%
9%
7% 18% 15% 42%
6% 63%
22% 30%
31%
24%
38% 25%
2005-2010
2011 onward
23%
24%
2005-2010
2011 onward
Loss realized
Private equity buyers
IPO or sale of shares
Repayments
Management
Industrials (Trade sales)
Accumulated amounts exited: 2.4 bln MAD Number of exits: 98 Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
13
4.
Funds Under Management
15
5.
Investments
23
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2017
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 Report – AMIC 2016
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© 2017 Grant Thornton
7. PRIVATE EQUITY PERFORMANCE
Gross Internal Rate of Return (IRR)* & Multiple
Unweighted average IRR per quartile
2000-2016 42% 2.0 x 13 %
16% 4%
-12% Gross IRR
1st
Global multiple
Quartile
2nd Quartile
3rd Quartile
4th Quartile
* Average Gross IRR on exits (Cf. Methodology)
Weighted average IRR at end of 2016: 13% Average multiple (unweighted): 2.0 (Seed - Venture: 1.2 / Growth: 2.5 / Buy out: 1.4)
Average investment length: 6.1 years Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
13
4.
Funds Under Management
15
5.
Investments
23
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2017
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 Report – AMIC 2016
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© 2017 Grant Thornton
8. PRIVATE EQUITY ECONOMY AND SOCIAL IMPACT – Turnover and employment
Turnover growth and employment growth of invested companies (by end 2016) Employment CAGR by the end of 2016* = 10.5 %
Turnover CAGR (compound annual growth rate) of invested companies by the end of 2016* = 12.3 %
CAGR by end of 2015 = 4.9 % CAGR by end of 2014 = 4.2 %
CAGR by end of 2015 = 17.6 % CAGR by end of 2014 = 15.4 % * Based on data of 65 invested companies and still in portfolio
Turnover CAGR by development stage
Employment CAGR by development stage 52%
24% 12%
11
39
15
14%
10
-2%
39
15
Growth
Seed / Venture
1% Growth
Buy out / Turn around
Buy out
Seed / Venture
Turnover CAGR by sector
20% 16%
16%
4
12
ICT
Trade and distribution
12% 7%
8%
7
11
Agribusiness
9
Other Construction BTP industries
21
Services
X Number of companies by sector / category Private Equity Report – AMIC 2016
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© 2017 Grant Thornton
8. PRIVATE EQUITY ECONOMY AND SOCIAL IMPACT – ESG and certification
Annual training plan
Strategic workforce planning
Code of ethics
49%
64%
52%
33% 19%
25%
At time of acquisition
End of 2016
Actions engaging the company in social activities
At time of acquisition
End of 2016
At time of acquisition
End of 2016
Actions for environmental protection
26%
28%
14% 12%
At time of acquisition
End of 2016
Private Equity Report – AMIC 2016
At time of acquisition
End of 2016
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© 2017 Grant Thornton
8. PRIVATE EQUITY ECONOMY AND SOCIAL IMPACT – Governance Company audit
Oversight and steering committees 100%
Reporting tools
98%
99%
60% 36%
34%
At time of acquisition
End of 2016
Performance indicators and scoreboards
At time of acquisition
End of 2016
At time of acquisition End of 2016
Private Equity Report – AMIC 2016
End of 2016
Budgeting and budget monitoring policies 99%
98%
38%
At time of acquisition
38%
At time of acquisition
41
End of 2016
© 2017 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
13
4.
Funds Under Management
15
5.
Investments
23
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2017
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 Report – AMIC 2016
42
© 2017 Grant Thornton
9. FORECASTS 2017
Main challenges for 2017
Priority investment areas (for transregional funds)
8% 25%
27% 17%
34%
18% 25%
25%
21%
Investing in new companies Fundraising
Morocco
Sub Saharan Africa
Managing underperforming companies
Tunisia
Algeria
Egypt
Identifying exits
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9. FORECASTS 2017
Planned fundraising for new funds 25%
25%
17% 13%
0% S1 2017
S2 2017
S1 2018
S2 2018
Not planned
Planned exits for the majority of portfolio companies 24%
24% 19%
19% 14%
S1 2017
Private Equity Report â&#x20AC;&#x201C; AMIC 2016
S2 2017
S1 2018
44
S2 2018
Not planned
Š 2017 Grant Thornton
9. FORECASTS 2017
Investment sectors over the next 5 years
Investment regions over the next 5 years
2% 4%
8%
13% 13%
7%
15% 10%
7%
11% 11% 8%
15%
11% 11%
8% 11% 14%
10% 11%
9%
14%
9%
Agribusiness Health
New technologies Services
Education
Energy
Transport and Logistics
Distribution
Automobile
Telecom BTP
Private Equity Report â&#x20AC;&#x201C; AMIC 2016
Consumer goods
45
Casablanca
Marrakech
Fez
Agadir
Rabat
Tangier
Oujda
Laayoune
Š 2017 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
13
4.
Funds Under Management
15
5.
Investments
23
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2017
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 Report – AMIC 2016
46
© 2017 Grant Thornton
10. KEY FIGURES 2016
Funds raised
Investments
16.6 bln MAD raised by private equity and infrastructure funds
6.3 bln MAD invested in 183 companies by the end of 2016
86% funds raised since 2013 are by transregional funds
About 3 bln MAD still available for investment
Average investment ticket
Average investment ticket
Seed / Venture
Growth / Buy out / Turn around
= 9 mln MAD (2011-2016)
= 50 mln MAD (2011-2016)
786 mln MAD invested in 2016
Exits
Accumulated amounts exited = 2.4 bln MAD
68% of exits since 2011 are through trade sales or sale of shares (as % of value)
Economic and social impact
99% of companies have implemented a complete system of governance
Employment CAGR = 10.5% Turnover CAGR = 12.3%
Performance
Private Equity Report â&#x20AC;&#x201C; AMIC 2016
Weighted average gross IRR = 13%
Average investment time = 6.1 years
47
Average multiple = 2.0
Š 2017 Grant Thornton
Summary 1.
Scope & Methodology
3
2.
International and National Economic Context
7
3.
Fund Management Companies
13
4.
Funds Under Management
15
5.
Investments
23
6.
Exits
33
7.
Private Equity Performance
36
8.
Private Equity Economic and Social Impact
38
9.
Forecasts 2017
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 Report – AMIC 2016
48
© 2017 Grant Thornton
11. ANNEXE I – Principal deals outside of AMIC’s perimeter (2016)
Investment company
Operation
THE ABRAAJ GROUP
Financing of the development of Label’Vie Investment of about 1 bln MAD
ACTIS
Supporting the growth of Mundiapolis in Africa Investment of 100 mln USD
FIPAR
Equity investment in the capital of the PSA plant in Kénitra Investment of 7 mln €
INVESTEC
Financing of the development of SJL Maghreb Investment of 500 mln MAD
Logistics
SAHAM TANA AFRICA CAPITAL
Financing of Sana Education Morocco (SEM) Investment of 65 mln MAD
Education
Private Equity Report – AMIC 2016
Sector
49
Distribution
Education
Automobile
© 2017 Grant Thornton
11. ANNEXE II – ACRONYMS
Bln MAD CAGR EBRD EIB EMPEA GDP HCP 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 High Commission for Planning of the Kingdom of Morocco 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 Report – AMIC 2016
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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.
Web Site: www.amic.org.ma Private Equity Report â&#x20AC;&#x201C; AMIC 2016
Outsourcing accounting and social services support
Web Site: www.fidarocgt.com Š 2017 Grant Thornton