Currently, African stock markets are not really adding many growth companies to their ranks. Casablanca would like to change that and has launched a charm offensive toward potential IPO candidates.
Capital News Africa: From the Trading Floor – Week 5-2022
The announcement during an online event was loud and clear: “Send me a message and I will visit you personally,” said Tarik Senhaji, managing director of the Bourse de Casablanca. Senhaji wants to attract more companies to Casablanca’s bourse and has pledged his full support in the endeavour. “We are there to help you and we are especially interested in hosting more Moroccan companies,” he said.
According to Mohamed Horani, president of an association for listed Moroccan companies, the time for doing an IPO in Casablanca couldn’t be better. This is because the Moroccan stock market “really wants to finance the growth of Moroccan companies,” Horani said. Given this, Younès Benjelloun, managing director of CFG Bank, recommended that companies contact capital market experts now even if they feel they are not ready for an IPO. “There is more than enough money in the market,” Benjelloun said. CFG Bank intends to go public end of 2023 or beginning of 2024.
Senhaji and the other officials were speaking during an online event organised by Morocco’s leading business daily “L’Economiste.” The questions from the participants were so numerous that the moderator was unable to get them all answered during the event.
Apart from the huge interest in it, what was remarkable about the event was that it shows how serious Morocco is about promoting its stock market. We applaud this and lament the fact that such a strong will is missing among other financial centres on the African continent.
Policymakers in Africa often rely too much on corporate finance from private equity funds, venture capitalists and financial development institutions (FDIs). This is not ideal for African companies, as such international investors only finance activities that are currently fashionable in their home countries. It’s then just a matter of luck when those activities fit the economic needs of the local population. It is also for this reason that African stock markets like Casablanca must do more to attract African companies.
The arguments in favour of an IPO are the same for companies in Morocco as they elsewhere in Africa: A listing vastly improves corporate governance, as the company must meet the demands for transparency from its investors. Moreover, a listing provides a company with much more financial flexibility. It can easily tap more capital for growth and is less dependent on bank loans. A listing also makes easier the transition of a company to the next generation of company owners as an IPO makes the wealth invested in the family’s company easier to transfer.
In our view, the Moroccan stock market event also reflects that the kingdom is setting itself apart thanks to a thoughtful and far-sighted economic policy. And the fact that the event resonated so well shows how much interest there is in IPOs – including among investors. Such interest must, however, be steered in the right direction.
We at Capital News Africa see it as our mission to increase the transparency of African stock markets and to raise awareness of those markets internationally. This is because we believe that a stock market listing is the best means for a company to both ensure its independence and to put the financing of its growth on a sure footing.