African Law Business
Andrew Mizner
A USD 100 million takeover of Moroccan irrigation company CMGP continues the growing trend for interest in the agriculture sector in North Africa and beyond.
A majority stake in a Moroccan irrigation company Compagnie Marocaine de Goutte à goutte et de Pompage (CMGP) has been bought by an Africa-focused private equity firm for approximately USD 100 million, with a view to expanding business both domestically and internationally.
In Morocco’s largest private equity transaction of the year so far, London-headquartered Development Partners International (DPI) acquired the majority stake from the Moamah family, which founded CMGP, and Amethis Maghreb Fund I. It is the second investment that DPI has made in Morocco through its African Development Partners II (ADP II) fund.
CMGP has manufactured, distributed and integrated irrigation and micro-irrigation equipment for clients in the agriculture and infrastructure industries, since it was founded in 1995. The company said that following the deal, it would work towards diversifying its product range and seek to expand into other countries across the continent, at a time when demand for water, in North Africa in particular, means such skills will attract a premium.
M. Youssef Moamah, chairman and chief executive of CMGP, said in a statement: “Our company has delivered strong growth over the past two decades. We believe partnering with DPI will allow us to continue our strong organic growth in Morocco and further extend our footprint into new markets in Africa.”
DPI has investments in 18 countries across 27 countries in Africa, including in finance and microfinance, logistics, fast moving consumer goods, telecommunications, food and pharmaceuticals. It already held an investment in Egyptian German Industrial Corporate (EGIC), which supplies water pipes and drainage in Egypt and internationally.
Co-founder and chief executive of DPI Runa Alam said of the CMGP acquisition that the investor “is committed to making investments in Morocco and we view the Francophone region of Africa as a core geographic area of focus”.
She said the deal would “add to our geographical and industry diversification for the ADP II portfolio”.
The DPI interest in the project was explained by partner Sofiane Lahmar, who said that CMGP would be targeting growth in that market, as “over two-thirds of Morocco is listed as agricultural land according to the World Bank, with only a small percentage available for irrigation”.
She added that there is also scope for growth beyond the border of Morocco: “There is considerable potential for expansion in irrigation across the African continent,”
Other areas of North and West Africa have similar needs, according to the United Nations Food and Agriculture Organisation, as farmers compete with urban and industrial users for water, owing to population growth, thus placing a premium on irrigation technology.
It comes just a few months after another deal in the Moroccan agricultural sector, in which a Moroccan potash fertiliser project was acquired by an Isle of Man-registered company. The country is increasingly seen as an attractive entry point to Africa for international investors.
CMGP received legal advice on the deal from Dentons in Casablanca, led by local managing partner Patrick Larrivé.
DPI received financial advice from PwC and on the legal side was advised by Naciri & Associés Allen & Overy, the Moroccan branch of the Magic Circle law firm, whose Casablanca-based team was led by office managing partner Hicham Naciri, and consisted of several local counsel and associates, while Washington, DC-based associate Kuang Chiang advised on elements relating to the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC).
In a statement, Amethis managing partner Laurent Demey and investment director Wilfried Poyet, said: “The high quality of CMGP’s work, its solid reputation on the market and its devoted teams allowed the company to reach this new milestone in its development.”
