Moroccan national holding company Société Nationale d’Investissement (SNI) has purchased one-third of the investment group Societé Maroc-Emirats Arabes Unis de Développement (SOMED), it confirmed on February 1. SNI spent $161.9 million on shares owned by institutional investors and the Abu Dhabi Fund for Development (ADFD) in SOMED, which has interests in tourism, real estate, metals and food. In 2006, the firm reported a net income of $26 million on a consolidate turnover of $181 million. It is controlled by Morocco’s royal family and was founded in 1982 as a joint venture between Morocco and the United Arab Emirates with the aim of luring foreign capital and expertise to major projects in the kingdom. After SNI’s investment, ADFD’s share in SOMED has dropped from 50% to 33.9% and the Moroccan treasury retains its 33.25% stake. The deal represents a new era for SNI, which has traditionally had a portfolio of significant investments, but not non-majority investments. It has not played an operational management role in its holdings in the past, though it has been actively involved in strategic planning in various capacities. The deal shifts control into Moroccan hands and is seen as an opportunity for SNI to tap into the fast-growing areas of the economy in which SOMED operates.
Cracking the whip
A statement by the national holding company specified tourism as “a sector that is vital to the Moroccan economy,” giving SNI “an opportunity to put our financial resources to work.” SNI’s intentions toward SOMED’s other holdings remain opaque, but the real estate division has synergies with the tourism wing, while food and metals are two of Morocco’s stronger export-oriented industries. SNI’s purchase of a share in SOMED has been widely praised as good business. “Everyone is a winner in this deal,” said one investment analyst privy to the purchase. “The investors have realized a good return and SNI has made a good investment.” According to analysts at BMCE Capital, the firms are a good match. “SOMED is henceforth controlled by Moroccan interests that should provide a serious crack of the whip for the development of this holding, which is known for its discretion and prudence in investing,” they said in a statement. “Ultimately, this deal raises other questions concerning the opportunity to realize certain synergies between the two groups, notably in the sphere of telecoms, real estate, metallurgy and trade.” For the time being, however, the focus remains on tourism. SOMED has been heavily involved in developing the industry in line with King Mohamed VI’s Vision for 2010, which aims to increase visitor number from 7.4 million last year to 10 million by 2010. In accordance with this, the number of visitor beds is set to increase to 160,000 from fewer than 140,000.
Government support for tourism
SNI’s investment in SOMED is indicative of the potential of Morocco’s tourism sector, as well as the government’s confidence in it. In 2007, the sector brought around $6.5 billion into the economy, an increase of 12% on the previous year. SOMED currently owns a total of 3,000 visitor beds through properties in Casablanca, Tangiers and Agadir; it controls hotels operated by the Sheraton and Palmyra franchises in Marrakech. The firm also has a number of key developments underway in Morocco at present. One such is the Raffles resort presently under development in Marrakech. The hotel at the center of this development is likely to contain around 150 rooms, 36 luxury villas and a spa, although final details have yet to be released. With Moroccan property developer Addoha, it is building apartments at several sites across the country, on a total of 250 hectares of land. SOMED has also partnered with Caisse de Dépôt et de Gestion du Maroc (CDG) to become involved in the 3700-bed Mazagan project, part of Morocco’s Plan Azur, a six-resort strong “intelligent seaside tourism project” which will include eco- and health-tourism developments. Morocco’s tourism sector is a natural area of interest for investors, given growing visitor numbers and the government’s support. SNI will be hoping to capitalize on local knowledge, economies of scale and synergies with SOMED to make a formidable domestic player in the industry.
