The IPO, Morocco’s largest in eight years, was valued at Dh1.94bn (€177.5m), of which Dh600m (€55.2m), or more than 30%, came from individual investors. Investor interest in the sale was high, with the shares more than six times oversubscribed, according to the CSE.
The Marsa Maroc IPO follows two other highly sought-after offers in 2015 – the float of a 15% stake in fuel distributor Total Maroc in May, which raised Dh716.2m (€65.9m) and was 6.7 times oversubscribed, and the sale of Dh180m (€16.6m) worth of shares in insurance broker AFMA in December, which was seven times oversubscribed.
In addition to demonstrating strong investor appetite for equity sales in Morocco, the Marsa Maroc IPO marks the first time the government carried out privatisation through the bourse, and observers note it could be a harbinger for further such offers.
Bourse automation and efficiency
The sale comes amid ongoing efforts to increase the efficiency of the bourse and encourage more listings and products.
The CSE has seen a steady increase in capitalisation in recent years, alongside the rollout of a number of new products and structural reforms – all of which have helped boost trading and aided efforts by the authorities to position Morocco as a financial gateway to the broader region.
However, IPO performance has been somewhat more muted: in the years since the 2008-09 global financial crisis, the number of IPOs in Morocco has slowed. In 2006 and 2007 the bourse witnessed 10 listings each, with another five recorded in 2008. Between 2009 and 2015, however, the annual average fell to just 1.4 – a trend seen in a number of Africa’s frontier markets.
In early August the CSE introduced a new integrated trading and surveillance IT programme aimed at improving automation and operational efficiency. The new dual-armed platform, which includes the Millennium Exchange for equities and fixed income trading, as well as Millennium Surveillance to monitor trading and detect unusual behaviour, should also allow for the listing of new products, such as exchange traded funds (ETFs).
The platform is part of a larger cooperative effort between the CSE and the London Stock Exchange Group (LSEG), which previously worked with Moroccan officials to improve trade repository technology and encourage more small and medium-sized enterprises (SMEs) to list.
In July of last year the two signed an agreement to launch the LSEG’s Elite programme in Morocco. Already active in the UK and Italy, the initiative helps SMEs with significant growth potential gain access to long-term finance, including through equity markets.
Since the programme launched in April the CSE has identified 12 companies that are eligible, and Hicham Elalamy, director of the newly created Moroccan Capital Market Authority (Autorité Marocaine du Marchés des Capitaux, AMMC), told OBG around half of the firms that will take part are expected to eventually list.
“To improve the liquidity situation, there is a need for both more IPOs as well as more investors,” he said.
Efforts to boost trading have been reflected in strong performance in the first half of 2016. The CSE’s Moroccan All Shares Index was up 12% year-to-date in early September, just shy of 10,000 points.
Market capitalisation is also trending upward. There are currently 75 companies listed on the CSE with a combined market capitalisation of Dh506bn (€46.7bn), about a third of which is held by foreign investors. This marks an 11.6% increase from end-2015, albeit down from pre-financial crisis levels.
Capital markets reforms
Moves to court more listings are taking place in the context of wider capital markets reform aimed at improving transparency and liquidity.
Regulatory authority was shifted to the newly created AMMC in February. Previously, the Securities Ethics Council (Conseil Déontologique des Valeurs Mobilières, CDVM) had regulated the market.
Perhaps the most significant difference between the AMMC and the CDVM is the degree of independence from the government. The CDVM operated under the direction of the minister of economy and finance, while the head of the new authority is a non-governmental official appointed by the Cabinet.
In addition, unlike the CDVM, the AMMC will not be responsible for sanctioning companies that violate market regulations. Instead, a new sanctioning council has been created to allow the AMMC to focus resources on oversight.
Other ongoing legislative reforms, approved by the lower house of parliament in late June, will see the creation of two new exchanges – an alternative board dedicated to SMEs and another to focus on collective investment funds, such as ETFs and real estate investment trusts.
© Oxford Business Group 2016