DPI splashes $100m on Moroccan irrigation business

Partner Sofiane Lahmar says the Africa-focused PE firm, which has nearly fully deployed its $725m Fund II, will look to increase its exposure to agriculture.

Development Partners International, a pan-Africa private equity firm, has acquired a majority stake in Compagnie Marocaine de Goutte à goutte et de Pompage, Morocco’s largest manufacturer of irrigation systems.

The share will be bought from the founding Moamah family and Amethis Maghreb Fund I,
a €100 million vehicle closed in 2013, for $100 million. Youssef Moamah, chairman and chief executive of CMGP, will remain a shareholder in the business.

With this deal, which DPI bills as the largest in Morocco this year, the firm will have fully committed its latest fund, Africa Development Partners II. The 10-year vehicle, closed in 2013, is approaching the end of its investment period. DPI declined to comment on future fundraising plans, citing regulatory constraints.

Sofiane Lahmar, a partner at the firm, told Agri Investor he and his colleagues saw a sizeable investment opportunity in the agricultural sector, which he said employs nearly 40 percent of Morocco’s population and is growing at close to 15 percent a year.

Water scarcity is a major issue in much of Africa, he noted, and companies such as CMGP, the leader in drip irrigation in Morocco, are poised to capitalize on growing demand.

Lahmar explained that CMGP is already looking to expand outside Morocco, with projects under way in Mauritania and Senegal. The company often serves Moroccan clients and multinationals present in the country that are developing abroad. “They follow their customers,” he said.

Morocco presents an exciting span of crops, he observed, ranging from wheat to fruit and veg, with particular strength in citrus and berries, a lot of which is exported. “Over two-thirds of Morocco is listed as agricultural land according to the World Bank, with only a small percentage available for irrigation. Therefore CMGP is well-positioned to grow.”

In the past, DPI has considered investing in a company making fertilizers, Lahmar said, a deal which did not complete. The firm is now looking at other potential targets in the agricultural sector, notably in processing, warehousing and logistics.