Morocco is tapping about 2 billion euros of funding from the Gulf to build tourism infrastructure through a private equity vehicle that recently announced its first project, an upgrade to Casablanca’s main seaport.
The vehicle, called Wessal Capital, represents one way in which energy-rich GCC countries have drawn closer to Morocco in recent years. Economic ties have grown stronger especially since Arab Spring unrest spread across the region three years ago, leading to massive new investment in roads, schools, hospitals and other projects from Morocco to Jordan, Saudi Arabia, Qatar and the United Arab Emirates to stave off discontent.
The backers of Wessal, which began via a memorandum of understanding back in 2010, are Qatar Holding, the Kuwait Investment Authority’s Al-Ajial fund, Aabar Investments in Abu Dhabi and Saudi’s Public Investment Fund. Each of these sovereign-linked investment pools is contributing 500 million euros to the project. An additional 500 million euros is coming from a Moroccan government fund for tourism development.
Wessal’s Moroccan managers say it’s a way for the Gulf’s sovereign funds to get a better taste of the country’s return potential.
“We see this as something that will help sovereign wealth funds and other institutional investors become more interested [in Morocco],” said Tarik Senhaji, a board member of Wessal. “This is really an initiative on the Moroccan side. We wanted to have a model that was a win-win for international investors and the Moroccan state. We want to do good projects that are going to have good financial returns and are going to be useful in terms of the local economy and social responsibility.”
The Casablanca port project is expected to take five years and cost 530 million euros. Changes include the relocation of fishing vessels and better connections between the port and the historic medina, as well as an upgraded cruise ship terminal. The aim is to draw more tourists to the city, a relatively drab financial and business center.
Wessal plans to act like a private equity fund, seeking exits after a number of years to lock in returns for the shareholders, Mr. Senhaji said. The fund could deliver those returns by listing assets on stock markets, he said, or explore securitizing revenues and selling them to new investors. Wessal could also bring in additional private equity investors, he said.
Banks have already shown interest in helping Wessal finance its investments, Mr. Senhaji said. Following the Casablanca port project, the plan is to launch projects in the northern city of Tangier and in Rabat, the capital.
“It’s just the start of a very long friendship,” Mr. Senhaji said, paraphrasing the famous final line of the Humphrey Bogart classic Casablanca. “We see the same with financial investors in general. We want to position Morocco as a hub for first-tier institutions and we believe that is a good start.”
