Moroccan sovereign fund aims to double investments to $6bn in 5 years

Exclusive: Ithmar Capital is speaking with long-term investors for co-investments in several projects in Morocco, its managing director says

Ithmar Capital, Morocco's sovereign wealth fund, hopes to double its investments to $6 billion (Dh22bn) within the next five years as it looks to diversify its domestic portfolio and seeks co-investment opportunities elsewhere in Africa, its managing director said.

Ithmar, set up with $1.8bn of committed capital in 2011, is looking to increase the pace of investment in Morocco next year as it gets more funding from the government, Obaid Amrane, who is in Abu Dhabi attending a two-day Africa Investment Summit hosted by the Abu Dhabi Investment Authority told The National.

“We don’t have numbers so far, we are working on those, and we will have them in early 2020,” he said of the potential size of the funding from the government. “Diversification into infrastructure, into productive [sectors of the Moroccan] economy will at least double the size of the investments that we have already done.”

Ithmar, which prefers to co-invest with partners, is in talks with Middle East investors and elsewhere about investing in Morocco. The fund has a pipeline of projects and it can combine several projects in one portfolio deal, whose value may reach as high as $1bn.

“We are working on some [potential deals] that are dedicated to industry, also in agriculture business and some energy and renewable energy projects,” Mr Amrane said. “There’s strong interest for potential co-investments from our partners on the back of Morocco’s track record ... we have a very good track record in infrastructure sector, ports and facilities, airports and energy generation projects, specifically renewable energy, highways and other segments related to mobility and water treatment projects”.

Morocco's economy is projected to expand 2.7 per cent this year, and accelerate to 3.7 per cent in 2020, according to the International Monetary Fund data. The African nation with a population 35.6 million has been trying to boost investment inflows, especially in its power sector. Morocco has a bold target of getting more than half of its electrical energy from renewable sources by 2030 and a plan to have 2,000 MW of wind and 2,000 MW of solar power plants by 2020, looking to add 1.5GW renewable capacity annually. The kingdom currently has the world's largest concentrated solar farm.

It needs to expand its industrial base and invest aggressively in infrastructure and tourism development schemes. As part of Vision 2020, Morocco aims to become among the top 20 tourist destinations globally. The kingdom wants to double the size of the industry and generate revenues of 140 billion Moroccan dirhams (Dh53bn).

Ithmar is among the entities driving investments in the country's tourism sector. It is a sponsor of Wessal Capital, a fund backed by four other sovereign funds from the Gulf region that include the UAE, Saudi Arabia, and Kuwait. Wessal has two major real estate projects in Rabat and Casablanca and more are on the cards, Mr Amrane said.

“We have the ambition to replicate [the] concept [of Wesal] and association to other economic sectors [in Morocco] and also to new geographic regions,” he said.

Food security and agricultural investments are among the top priorities for the country whose agricultural output has slowed in recent years, Mr Amrane said. Agriculture is an element of investment “we want to share with our potential partners, whether in the Middle East or in Africa,” he said.

Ithmar is also working with other sovereign funds in Africa to build a pipeline of “bankable projects”. It is open to co-investments in other African markets.

“This is what we are willing to do and we have started discussions with sovereign wealth funds [outside Africa] that have excess funds to be invested,” Mr Amrane said. “We are identifying a pipeline of projects to be financed with [our] counterparts in African countries to generate the deal flow.”

The fund is striving to create a link between the public and private sector to draw investment to Africa, however, talks with sovereign wealth funds in Europe and some in the Middle East are at “early stages”, he said.

Ithmar is also working with Nigeria Sovereign Investment Authority on Trans-African gas pipeline project that will bring Nigerian hydrocarbon resources to Morocco and its neighbours. The first pre-feasibility study is expected to be completed soon, which will be followed by a detailed feasibility of the project, he said, without giving the estimated cost of the project.

“It's a project of strategic importance and the new discoveries of gas in Senegal also gives it another reinforcement.”