Pan African private equity firm Development Partners International (DPI) has closed the largest private equity deal in Morocco so far this year – announcing it has acquired a majority stake in Moroccan irrigation system and solutions business Compagnie Marocaine de Goutte à goutte et de Pompage (CMGP) for $100 million.
DPI’s African Development Partners II (ADP II) acquired the stake from existing shareholders, the company’s original founding family, the Moamah family, and Amethis Maghreb Fund I.
Founded in 1995, CMGP is the leader in Morocco’s irrigation market. The company’s comprehensive business offers a range of products in manufacturing, distribution, and the integration of irrigation and micro-irrigation systems for the agriculture and infrastructure industries. At its core, CMGP offers fully integrated irrigation solutions to Morocco’s agriculture sector, giving the country’s producers best-in-class irrigation options that will raise crop yields while using less water in a region where water scarcity is a critical concern.
A growing need for water conservation across the MENA region is expected to be a driving force behind significant growth for the drip irrigation industry. The global drip irrigation market is forecast to grow at a CAGR of 11.6 percent between the years 2017 and 2022, reaching a value of $6.54 billion over that timeframe, according to Markets and Markets. For the MENA region, the highly fragmented and competitive drip irrigation industry, which was valued at US$98.3 million in 2013, is projected by Transparency Market Research to grow at a CAGR of 18.3 percent between 2014 and 2020 to reach a value of US$317.4 million.
DPI partner Sofiane Lahmar notes that CMGP’s geography was of interest to the firm, stating, “Over two-thirds of Morocco is listed as agricultural land according to the World Bank, with only a small percentage available for irrigation, therefore CMGP is well-positioned to grow and provide these essential solutions. In addition, there is considerable potential for expansion in irrigation across the African continent and we look forward to working with the company on a number of strategic initiatives to address this.”
As agricultural production matures in the region, the demand for irrigation technologies is also expected to climb, especially in countries such as Morocco, Qatar, and Sudan, which are focusing on lifting their agricultural output. In order to expand production and attain its goal of achieving an agricultural GDP of US$17 billion by 2020, Morocco started leasing agricultural land to domestic and foreign investors for agriculture projects. In 2008 Morocco created the Green Morocco Plan with the goal of investments of US$1.1 billion by the end of the decade and to double the country’s agricultural GDP from US$8.5 billion in 2008 to US$17 billion by 2020.
Initiatives such as these are marking Morocco as a point of interest for investors such as the $1.1 billion DPI, which looks to invest in companies that can benefit from and capitalize on the rapid growth of Africa’s growing middle class.
“DPI is committed to making investments in Morocco and we view the Francophone region of Africa as a core geographic area of focus,” said Runa Alam, CEO and founder of DPI. “The investment in CMGP will mark our second investment in Morocco from our ADP II fund. The transaction will add to our geographical and industry diversification for the ADP II portfolio, consisting of finding quality assets and sponsors in line with our investment strategy in countries that complement the Fund’s portfolio.”
“We are very excited to partner with CMGP and M. Youssef Moamah to support the company’s growth in Morocco and across Africa,” said Lahmar.
-Lynda Kiernan
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