Project detail - MEDITERRANIA CAPITAL II SICAV PLC

Who is our customer

Mediterrània Capital II (MC II) will be the second fund managed by Mediterrània Capital Partners (MCP or “the Manager”). The fund will invest growth capital in established medium-sized businesses primarily located in Morocco, Tunisia and Algeria with the potential to develop their activities and become Maghreb (Morocco, Tunisia and Algeria) regional players.

What is our funding objective?

The market for medium-size companies is large, with ample opportunity to deploy MC II’s capital. In North Africa, small and mid-cap opportunities are vital to economic growth. In Morocco these companies represent 90% of enterprises. On average, these companies employ 55% of the employment force. However, they only contribute 20-40% to GDP in the region. This productivity gap suggests limited access to financing and lack of strategic support. As banks are deleveraging and implementing Basel III, they have limited appetite for providing growth capital to small- and medium-sized enterprises (SMEs). With only 0.05% PE to GDP, PE is covering a limited piece of the market. Like MC I, the Fund will invest growth capital in established medium-sized businesses primarily located in the Maghreb region with the potential to develop their activities and become regional players. The fund is sector agnostic, excluding real estate, but expects to see the most deal flow in the following sectors: Health (pharmaceutical industries and health services); Consumer Goods; Retail; Financial Services; Clean Energy; Transport and logistics; and the Agro-industry.

Why do we fund this investment?

Based on the good performance of the first fund and the experience of the team, next to Tuninvest, we believe MCP makes for a good addition to FMO's private equity portfolio. MC II’s fund size and market segment (more mature SMEs) are aligned with FMO’s strategy, ensuring that we are can play an additional role. So far MCP shows acceptable performance on a well spread portfolio (both in terms of years and countries) in their first fund and a stable and professional team. We believe the market is big enough and therefore we are comfortable adding a second North African fund manager to our portfolio. MCP brings a multicultural team (from Europe and all 3 Maghreb countries), a focus to turn its investees into Maghreb intraregional players to benefit from the expected regional integration and a strong Europe-Maghreb link through its Barcelona hub. While the region continues to undergo transformation, we believe Mediterrània, through FMO’s scarce high risk capital, can help to further job and wealth creation, one of the core factors underpinning the Arab spring.