Private Equity continues to grow in Morocco


In 2021, private equity investment reached a record level in Morocco, in terms of both fund raising and the growing number of companies receiving investment.

The private equity business is represented by the Moroccan Capital Investors Association (Association Marocaine des Investisseurs en Capital - AMIC), which was created in 2000 under Law 41-05 on undertakings for collective investment in capital (OPCC).

In addition to responsibilities relating to compliance, control and market practice development, AMIC aims to organise and represent  the Moroccan private equity industry and promote it among local and international investors, public authorities and entrepreneurs.

The association's president, Tariq Haddi, commented on the evolution of the industry in late 2021, saying: "Overall, we are seeing a maturing of experience and accelerated professionalisation across the industry".

"The sector saw 1% growth in 2020, as the growth of Moroccan companies fell by 30% and national GDP was down 6.3%1", Tarik Haddi explained. The private equity industry demonstrated resilience and even broke records at the height of the pandemic. As such, it performed well in 2021 with high levels of fundraising and an increase in the companies receiving investments.

The private equity sector owes these achievements to the Law on undertakings for collective investment in capital (OPCC). "2021 was a good year for business, particularly with the implementation of the OPCC law, which enabled a qualitative leap forward in terms of compliance, information systems and internal control," noted the AMIC president.

2021, a record year for investment

In 2021, some 12 asset managers invested a total of MAD 1.15 million, or €109 million. These investments went to 30 companies, 22 of which were funded for the first time and eight of which received supplemental investments2.

Furthermore, it should be noted that international development organisations are well represented in this sector. AMIC reports that the share of activity with these bodies has risen sharply since the first generation of funds (2000-2005).

To learn more, we reached out to Farid Benlafdil, a partner at AfricInvest, who explained the reasons for so much interest among international investors in this segment:

"Remember that the emergence and development of this asset class in Morocco has been strongly supported by the involvement of international development agencies (IDA). After a tentative start in the 2000s, the track record of Moroccan private equity has ranked among the best in North Africa, thanks to a more comprehensive equity offering and an increasing number of VC/PE professionals. In addition, the investment landscape in Morocco and its openness to international investors have created a framework conducive to the sector's growth, driven by investors who are very sensitive to regulatory issues, particularly with regards to the circulation of capital flows".


Source: AMIC 2021 Report

The European Union continues to be a favoured partner for Morocco

"63% of fundraising for the 4th generation of funds (2017-2021) came from foreign capital, including 52% from international development agencies and 59% from European sources (according to the AMIC 2021 Report above). The European Union being a chosen partner.

This type of investment has also had very favourable socio-economic impacts at different levels: on the development and resilience of companies supported during the pandemic, on their governance, on competitiveness and on employment".

When asked about the advantages of private equity in Morocco, Farid Benlafdil answered:

"Morocco, whose private sector is substantially driven by SMEs/ISEs,3 offers many value creating investment opportunities through the potential for improvements in strategy/governance and the leverage provided by equity financing in an environment characterised by companies that are chronically under-capitalised/over-indebted. In addition, there is a significant pool of companies going through generational succession, which private equity can support".

Seed capital and venture capital are starting to gain in momentum under the impact of the new OPCC investment funds and the initiative of the Caisse Centrale de Garantie (now Tamwilcom).

Tamwilcom is a public financial institution governed by banking law. It is the only government entity providing public financing guarantees.

Its mission is to work with its partners in the financial sector to meet the needs of Moroccan companies, through a range of financing instruments adapted to each stage of their life cycle.


Source: AMIC 2021 Report

At the end of 2021, seed capital and venture capital accounted for 32% of investments by quantity and 7% by value. By quantity, this form of investment rose from 26% between 2006 and 2011 to 48% between 2017 and 2021.

In terms of performance, the average gross Internal Rate of Return (IRR) is 13% with an average investment period of six years. The sector's overall multiple is 2 (1.2 for seed/venture, 2.3 for development and 1.8 for buy-out).

In addition, the three most attractive sectors for investment funds over the next five years will be healthcare, services and agribusiness.

The healthcare, services and construction sectors show the highest IRRs, at 26%, 18% and 17% respectively".

In terms of human resources, Mr. Haddi described the "professionalisation" and "growing experience" among management teams, with every employee offering an average of 13 years of experience and 15 investment deals.

Farid Benlafdil shared his thoughts about the prospects for private equity in the coming years:

"At the end of 2021, MAD 4.6bn (€437m) of capital was available for investment, with several fund initiatives still emerging in the various market segments. Over the next three years, investment is expected to reach MAD 4.2bn (€399 m), according to the latest study by Grant Thornton. However, there is still a whole segment of the market that is poorly served by PE funds operating in Morocco, i.e., SMEs/ISEs that generate revenue of less than MAD 100m (€9.5m) and whose financing needs barely exceed MAD 50m (€4.7m). However, this gap at the national level is expected to be addressed before long by the Mohammed VI Fund for Investment".

Finally, private equity is often considered a risky investment. We asked Omar Senhaji, Head of Societe Generale Securities Services Morocco, how Moroccan venture capital still manages to attract inflows from international investors:

"The new OPCC funds comply with international market security standards. In particular, an independent depositary has been established by law to supervise the investments made by these funds. Societe Generale Securities Services was one of the first depositaries to launch an OPCC offering, drawing on several years of experience in this asset class in Europe".

Azahraa Lahlou, Asset Management Consultant, SGMA

1Source: LesÉ, 13 June 2022
2Source: La Vie éco, 21 May 2022
3SMEs: small and medium-sized enterprises; ISEs: intermediate-sized enterprises.