Hatim Ben Ahmed
President of the Moroccan Association of Capital Investors (AMIC)
The AMIC President explains the main challenges faced by growth-stage companies in their search for financing. He also details how investment funds assess the growth potential of companies before investing in them.
What are the main challenges that growth-stage companies face when seeking financing?
A company in the growth phase often seeks to finance two elements: the investments necessary for its growth as well as the associated WCR (financing of the operating cycle). It is quite difficult for a medium-sized company to succeed in fully financing these two elements and it often finds itself having to revise its ambitions downwards. Indeed, very quickly, the banks, and this is normal, are slowed down by the level of equity capital of these companies. It is precisely our role as private equity investors to intervene at this level.
What are the current trends in investment fund financing, particularly for technology start-ups?
Our industry in Morocco is booming and we are seeing more and more new management companies setting up and actively participating in financing companies in Morocco. From now on, we believe that all companies, regardless of their size, have the opportunity to find an investment fund that meets their needs. The funds are generally multi-sector and offer financing mainly in capital but can, if necessary, associate debt products such as shareholder current accounts. Startups are also well served now with many management companies whose job it is and once again across the entire chain (pre-seed, seed, Serie A, etc.).
How do investment funds assess the growth potential of a company before investing in it?
There are many approaches of course, but I would say that we primarily look at what has been achieved in previous years because this gives a clear and proven idea of the company’s ability to achieve growth in its market. Then, of course, we analyze in detail the market, its growth and the competitive positioning of the company.
How can investment funds support companies in their transition to sustainable and responsible practices?
It is really at the very heart of the DNA of investment funds to implement sustainable and responsible practices. Indeed, management companies most often manage money from intentional investors for whom ESG is critical and ask us to ensure that their investments are made responsibly. Consequently, we offer companies all our know-how, our processes, on these subjects and this is greatly appreciated because business leaders see the impact that this has on their business.
Which sectors or types of projects are currently most attractive to capital investors?
The funds cover all types of sectors and the recent AMIC study shows that there is no particular sector that stands out. The most attractive projects are those where the growth potential is significant and where the company can quickly become a leader in its market.
What are the key criteria that capital investors look for when selecting companies for their portfolios?
We look at dozens of different criteria and each project is unique. However, those that come up often are: the quality and experience of management, the size of the market, the market share, the historical growth rate, the margin rate, the level of investment made, the WCR in number of days, the attractiveness and feasibility of the Business Plan, the exit prospects (stock market, majority sale or sale to another fund).
Private equity is a hit
The year 2023 was a record year for private equity. Indeed, fundraisings recorded a new record of 3 billion dirhams (MMDH). Over the period 2018-2023, they reached a total amount of 9.8 billion, more than double the funds raised over the period 2012-2017. The same is true for investments which reached 2.5 MMDH. The latter, which were made by 12 management companies, concern 25 new invested companies and 16 reinvestments. After a decrease in their participation between the first and third generation of funds (from 73% between 2000 and 2005 to 25% between 2012 and 2016), the capital raised from Moroccan investors saw a significant increase between 2018 and 2023, reaching 45% of total fundraising over this period.
Sanae Raqui / ECO Inspirations
