Framlington rides Maghreb emerging markets wave

01 July 1994

The London-based finance house Framlington Group has launched a $50 million closed-end Maghreb fund to invest in Morocco and Tunisia.

The move is intended to exploit the Maghreb states' burgeoning privatisation and stock market activity. Framlington says it is the first such fund to be offered to institutional and professional investors in the UK, the US, Europe and the Middle East. It is the second foray into North African markets by Framlington, which has also taken a stake in Egypt Fund Management Group (MEED 20:5:94).

The Maghreb Fund will be listed in Dublin. It is expected to close in mid-July, following heavy marketing by Framlington and approval by the World Bank's International Finance Corporation (IFC) of its participation. The IFC is expected to take up 20 per cent of the fund, Framlington says.

The fund is advised by Framlington Maghreb, a 66:34 venture of the UK group and Morocco's Banque Commerciale du Maroc (BCM). Framlington Maghreb is headed by the Tunisian-born Hatem Kchouk, who has worked for more than two decades with Framlington's parent company, Credit Commercial de France (CCF). The London-based LCF Edmond de Rothschild Securities is acting as lead distributor and placing agent for the units.

Framlington says it aims to produce a diversified portfolio, mainly invested in listed securities. Up to one third of the fund's assets will be allocated to Tunisia. It says it will also own stocks that are due to be listed within 18 months of purchase.

'As with any emerging market, investment in the Maghreb region is volatile, so Framlington has placed restrictions on the percentage of fund assets it will allocate to individual markets, industries and stocks,' Framlington said in a statement announcing the fund.

The fund is being sold on the back of projections of accelerated privatisation in Tunisia and a continuation of Morocco's sell-off programme, the most active in the Arab world. Simon Key, Framlington's research director and head of emerging markets, says the Tunisian market, currently capitalised at $1,300 million, 'is set to benefit from more than $1,000 million in privatisation deals over the next three years'. He calculates Morocco - whose market is now capitalised at $4,300 million - could see $2,000 million in privatisations during the same period.

Maghreb states are included in wider emerging markets funds, and in Morocco the local Omnium Nord Africain (ONA) and the US' Salomon Brothers have established a Morocco fund, headed by former finance minister Mohamed Berrada (MEED 10:6:94).

North African institutions are also looking to increase their presence abroad. The largest Moroccan bank, Banque Marocaine du Commerce Exterieur, has established a Spanish-registered subsidiary and plans to pursue listings in the Paris and Madrid stock exchanges in the coming months.

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