Alongside Disty Technologies, whose first stock market listing will take place on July 20, 2022, 5 to 7 other IPOs are in preparation with investment banks. Hope for a resumption of IPOs is growing among stock market participants. Why this enthusiasm, this optimism?
While geopolitical tensions and factors such as inflation reduced the number of initial public offerings (IPOs) worldwide by half in the second quarter of 2022 compared to the same period in 2021, activity in Morocco, elsewhere with or without a pandemic, has not changed. Over the three months concerned, 305 IPOs were registered for an amount of 40.6 billion US dollars worldwide, figures down 54% and 65% following a “record year 2021” which had seen 1,171 IPOs, according to a recent study by the firm EY (note: EY, also known by its former name Ernst & Young).
In Europe/Middle East/India/Africa, where “troubled times and unusual uncertainties have kept market volatility at high levels”, the number of IPOs fell to 83 (-62%), for an amount raised US$14.8 billion (-44%). In Morocco, the Casablanca Stock Exchange will host its first of the year on July 20, 2022 with the first listing of Disty Technologies, an IT distributor, whose IPO will bring the number of companies listed on the Casablanca market to only 76. Nevertheless, just under six months from the end of 2022, the hope of having IPOs is reborn. Indeed, parallel to the IPO of this SME created in 2011 by Younès Himdy, five to seven other IPOs are in preparation with investment banks, according to several operators of the Casablanca stock market. Among the operations expected, we can cite that of the Akdital Holding group, which specializes in the health sector, which is planning an IPO in order to finance its international expansion.
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For its part too, Dislog Group has already paved its way to the stock market. Announced for 2022, the IPO project through an IPO of the group chaired by Moncef Belkhayat is finally postponed to 2023. The other candidates for the stock market are practically all SMEs. “Absolutely, hope is reborn at the level of the resumption of IPOs on the Casablanca Stock Exchange. Indeed, the candidate companies seem to be SMEs, some of which are supported by private equity funds. Also, despite the price correction in 2022, the valuation ratios remain attractive for sellers with an average P/E (note: Price-earning ratio (PER), called in French price-earnings ratio) above 20. , Disty, which is part of the Elite program, can give ideas to the dozens of other companies that took part,” confirms Farid Mezouar, Executive Director of FL Markets.
It must be said that Disty will strengthen the middle market segment of the Casablanca Stock Exchange, which has been actively seeking for some time to expand the number of listed companies, in particular with an Elite program which is in its tenth cohort. Moreover, this IT distribution specialist will be the first SME to come out of this program, which aims to train managers of companies eligible for IPOs, to take the plunge following being part of the very first cohort in 2016. D where the optimism of the leaders of the Casablanca market who hope that Disty will create emulation among SMEs.
Speaking during the press conference announcing Disty’s IPO, the Managing Director of the Casablanca Stock Exchange, Tarik Senhaji welcomed this operation, which is a first of its kind since the SME will be listed on market A (Alternative ). For him, this IPO is of paramount importance since it will serve as a benchmark for future candidates, recalling that Disty is part of the first cohort of the Elite program initiated jointly by the Stock Exchange and the World Bank to support, supervise and, possibly, prepare this category of companies for its IPOs.
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Today, more than a hundred SMEs have joined the program since its launch in Morocco in 2016. Since then, these companies have also been able to easily use market financing by carrying out bond loans, capital increases or initial public offerings. in stock exchange. They can also resort to mergers and acquisitions, joint ventures, etc., thanks to the preparation and support they received by integrating Elite Morocco. According to a source close to the Casablanca Stock Exchange, a quarter of the companies that have benefited from the program have announced their intention to carry out an operation on the market, the majority of which via IPO. In addition, 6 companies have already carried out capital opening operations, 8 others have mandated investment banks for the opening of their capital and regarding fifteen companies are currently working on the overhaul of their strategy and/or started steps to improve their governance in anticipation of future recourse to the financial market.
Since December 2021, the Casablanca Stock Exchange has been conducting an awareness campaign among SMEs on the interest that the IPO represents for companies. This operation already has four regional meetings to its credit, in this case the one intended for companies in the North Region in December 2021, Fez-Meknes in March 2022, Oriental on May 13, and Casablanca-Settat on May 16. These meetings aroused the enthusiasm of entrepreneurs and business owners. It must be said that they manage to shed light on the financing opportunities offered by the stock market for companies, regardless of their size or geographical position.
Last year, thanks to TGCC’s IPO and capital increase operations, the amounts raised reached 3 billion DH in 2021. It is no coincidence that in the objectives that it has set to develop the capital market, the Special Commission on the New Development Model (CSMD) insisted on the importance of reducing the weight of banks in market capitalization from 35% to 20% in 2035 and increasing the number of listed companies from 76 in 2019 to 300 in 2035. It is therefore logical that the stock market begins to dream of reliving the rush of IPOs and IPO announcements at the end of 2011. At the time , companies lined up in front of the bell. In turn, Stroc Industrie, S2M, Jet Alu, Afric Industries, Fipar Holding, had succeeded each other on the stock market. But since 2016, recruits have been lagging behind and it’s barely practically one IPO per year.
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Indeed, despite a significant potential of companies that meet the criteria for listing on the Stock Exchange and that the Casablanca market is ranked fifth in the Middle East and North Africa (MENA) region according to the importance of market capitalization and 2nd in terms of transaction volumes at the continental level, IPO operations are still rare. “I am tempted to say that the insufficient number of IPOs is a collective responsibility. Thus, the State still prefers to finance certain profitable public companies (eg Tanger-Med) with private debt instead of attempting to increase capital on the stock market.
Also, depending on the case, banks may prefer to direct corporate clients towards bank credit or bond debt. Similarly, the Casablanca Stock Exchange seems to struggle to attract more than its traditional public, as shown by the example of the low number of civil servants participating in IPOs. In addition, the potential of digital marketing is underexploited for the promotion of actions. Ultimately, an IPO remains a form of risk-taking that is still little accepted in Moroccan economic culture,” analyzes Farid Mezouar.
