This week, two of Morocco's leading construction and industrial equipment companies opened applications in anticipation of their two initial public offerings (IPO).
On November 20, the Socit de Ralisations Mcaniques (SRM) announced it would start applications on November 28, in anticipation of an IPO on December 12. SRM is the leading representative of the largest industrial equipment producers on the international market.
Applications for shares in Feni Brossette, the seventh IPO so far this year, were launched as of November 16. The offering, due for December 4, is the first of its kind for a construction equipment company on the Casablanca Stock Exchange (CSE). The company is the national leader in scaffoldings and pipes.
The referential shareholder of the company since 1984, Somed (Socit Maroc-Emirats Arabes Unis de Dveloppement), will thus increase the company's capitalisation by Dh100m ($11.5m), a full 23.5% of the shareholder structure, divided into 338,984 shares valued at Dh295 ($33.9).
The IPO has been opened to three types of investors, with 4.7% of shares offered to employees at a 10% discount provided they hold the shares for a period of three years, 55.3% to individual investors and the remaining shares to institutional investors.
The coordinating institution of the IPO is Attijari Finances Corporation, one of the biggest players in the IPO market.
Bourse Finergy and Dar Tawfir, a subsidiary of CFG Group, are the underwriters of SRM's IPO. Shares will be capped at 100 per individual investor, and at 1500 for institutional investors.
A majority of the capital raised through the IPO of Feni Brossette, expected to reach roughly Dh94m ($10.8m), will be used to support the company's strategic investment plan for the period 2006-2010, predominantly focused on modernisation of factories and equipment and the doubling of its storage capacity, from 3200 to 8000 sq meters. In addition, Feni Brossette is increasingly turning its attention towards export markets for its scaffolding and public works equipment.
Banking on an annual growth rate of 8.8% in the coming four years, the company expects to dole out half of its net profits in the form of dividends to shareholders. This explains part of the attraction of the shares, even though the forecast growth rate falls below that recorded in the last three years.
This growth rate remains moderate compared to that of the period 2003-2005, which reached 14%, said Abderrafie Rifi, the director-general of Feni Brossette, at the IPO's announcement. (Ce taux de croissance demeure modr par rapport celui de la priode 2003-2005 qui s'lve 14%)
The IPOs this week come a mere month ahead of the closing of fiscal exemptions accorded to newly listed companies. While the IPO of Feni Brossette had been planned earlier this year, the listing of SRM was accelerated to take advantage of the exemptions, before they are withdrawn at the start of 2007.
The Casablanca bourse has recently witnessed a number of offerings that diversify options available on Moroccan capital markets, which have been dominated by financial institutions and banks.
Already surpassing banks in 2005 as the most traded shares, the telecommunications companies such as Maroc Telecom, with the highest capitalisation in the market at present, have illustrated the appeal of the high-tech industry to investors.
Thus investors have been spoilt with unorthodox listings this year, with the likes of IT distributor Distrisoft going public in September and the paint manufacturer Colorado listing in late October.
The general optimism for such new listings was illustrated by the fact that Colorado's IPO was 37.3 times oversubscribed.
© Oxford Business Group 2006
