Mediterrania Capital Partners is one of the most successful industry players, initially delivering success in North Africa, and now across sub-Saharan Africa (SSA). Founder and Chief Executive Officer Albert Alsina discusses its winning strategy. The firm’s successes include year after year winning the House of the Year Regional Investor accolade at the Private Equity Africa (PEA) Awards.
What is the philosophy behind Mediterrania Capital Partners?
We set up Mediterrania Capital Partners in 2013 as a private equity firm to focus on growth investments in small and mid-cap companies across North Africa and Sub-Saharan Africa. Our ethos was to fill a gap, as there was a lack of specialised investment vehicles targeting small and medium sized enterprises (SMEs) in the countries we were targeting. We were attracted to the growth potential and the need for tailored financial support to unlock the potential of businesses in these regions.
Our aim was to provide capital, strategic guidance, and operational support to SMEs to boost job creation, which eventually leads to economic development and, in turn, regional stability. We were also focused on generating attractive returns for our fund investors by leveraging our expertise in the African market. Overall, Mediterrania Capital bridges the gap between investors seeking opportunities in Africa and promising businesses in need of capital, and we add in the expertise to scale and succeed.
What types of deals do you find most attractive?
We look for companies with strong growth potential, solid management teams, and scalable business models. Our strategy is to invest in minority stakes—to support the expansion of existing businesses—through organic growth initiatives, geographical expansion, and product or service diversification. The sectors we target are those we see as having high growth potential, and favourable market dynamics, such as consumer goods, healthcare, technology, and financial services.
We look for opportunities where we can add value through our industry expertise, operational support, and network of contacts. The ultimate goal is to drive growth and maximise returns for ourselves while generating a positive impact on society and the environment.
What is your fundraising strategy?
Part of our fundraising strategy is to have a targeted investor base, such as pension funds, endowments, foundations, sovereign wealth funds, family offices, and fund-of-funds. These typically have long-term investment horizons, and are seeking exposure to emerging markets, such as the countries we are investing in.
We also have a strong focus on relationship building, which involves regular communication, meetings, and networking events. This helps to establish trust, demonstrate the firm’s track record and expertise, and align investor expectations with the investment strategy.
How do you make cater to different LP needs?
We offer customised fund structures tailored to meet specific limited partner (LP) risk and return preferences, such as fees, co-investments, and governance. Our geographic focus allows the firm to capitalise on its regional expertise and networks to identify attractive investment opportunities and manage risks effectively.
Additionally, we leverage our strong track record to attract investors through successful exits, value creation initiatives, and portfolio company achievements. This boosts investor confidence and credibility. Investor education is also important, based on our thesis, market dynamics, and potential risks and opportunities, to help LPs make informed decisions.
What are some of your strongest exits in the industry?
At Mediterrania, we have a strong track record of delivering value addition and profitable exits.Our history of profitable exits demonstrates the ability to create value for investors through strategic investments and active portfolio management.
EXIT CASE STUDIES
Exiting infrastructure through an IPO
In December 2021, Mediterrania executed the partial exit of Travaux Généraux de Construction de Casablanca (TGCC), a leader in Morocco’s construction industry. The initial public offering (IPO) on the Casablanca Stock Exchange (CSE) had a one-week subscription period and was significantly oversubscribed.
This was the largest private equity-backed exit on the CSE, historically. The IPO consisted of a cash-out of approximately $32.06 million (MAD300 million) with a MAD300 million capital increase. Mediterrania delivered the partial exit after a four-year holding period, having first backed the company in 2018.
Selling a financial services company in an SBO
Groupe Cofina is a microfinance company that targets small-cap companies across West and Central Africa. Products include microloans, microinsurance, mobile banking, and social housing financing. In May 2022, four years after investing in the company, Mediterrania sold its stake to a UK-based private equity investor.
During Mediterrania’s holding period, Cofina grew its net banking income by 8%, from €37 million in 2020 to €40 million in 2021. The company also grew its number of employees by about 40%, from about 1000 people in 2018 to over 1400 in 2022. Cofina had disbursed over €1.5 billion worth of loans since its inception at the time of the exit.
Delivering a technology exit through an MBO
MedTech is a leading information technology (IT) and telecom services integrator. MedTech provides software integration services to corporate customers. Clients have included NCRM, a payments integration provider. Mediterrania invested in the company based on its strong management team, and the growth prospects of the fintech sector in Morocco.
In July 2022, Mediterrania sold its stake in MedTech through a management buyout (MBO) transaction. Under Mediterrania’s holding, the company achieved significant social improvements, including 50% employment growth. MedTech also increased female employment, growing this to over a third of the group’s total workforce.
Exiting schools to management in five years
Also in 2022, Mediterrania sold Groupe Scolaire René Descartes (GSRD), a Tunisia-based education provider through an MBO – selling its stake after almost five years. During the holding tenure, GSRD grew the number of students by 76%, from 1,700 at the time of investment to 3,000 in 2022.
The company also expanded from three campuses to five campuses in 2022. GSRD has also expanded its existing French international programme school located in Ennasr, which resulted in a 60% increase in student capacity, from 2,825 to more than 4,550. GSRD’s founder, Dhouha Sellaoui, said, “Thanks to Mediterrania, we quickly moved from a family entity to a large-scale education group, becoming the market leader in Tunisia.”
Selling a clothing store in a PE-backed MBO
In November 2022, Mediterrania sold its stake in Cap Retail in a management-backed secondary sale to Valoris Capital, a Moroccan private equity firm. Indigo is a Tunisian-based clothing retailer – which at the time of investment was selling 12 fashion and lifestyle brands from global brands such as LC Waikiki, Celio, and Mango.
Following Mediterrania’s investment, Indigo opened 12 new stores in 2016 – three in Tunisia, five in Algeria, and four in Morocco. The next year, in 2017, nine new stores were opened in Tunisia, four in Algeria, and one in Morocco. This was followed by five new stores in 2018 – four in Tunisia and one in Algeria. The year 2019 saw 19 new stores – six in Algeria, two in Morocco, and 11 in Tunisia. In 2022, two stores were opened in Tunisia and one in Morocco.
Executing a trucking company sale to management
In the last month of 2022, Mediterrania sold its stake in Centrale Equipement Carrosserie Industrielle (C.E.C.I.), Morocco’s leading trailer manufacturer and truck assembler – an MBO deal. During Mediterrania’s holding, C.E.C.I. brought engineering, architecture, and design services in-house, enabling the development of its own body moulds for manufacturing truck body parts.
The company also entered new business segments with custom-built trucks, trailers, and semi-trailers for specific uses such as mobile banking or health units and developed a proprietary range of flatbed trailers manufactured in Turkey. The company also created an offering for Renault and PSA passenger cars and light commercial vehicles.
Extracting a partial exit from a group of clinics
Akdital is a healthcare services holding company – the largest private clinic group. In December 2022, Akdital was listed on the Casablanca Stock Exchange, enabling a partial exit for Mediterrania. The investor is backing the company on growth prospects – on the back of rising demand for private medical services by the growing middle class.
This segment of the market has a high purchasing power and is more concerned about health. Mediterrania’s investment was aimed at supporting Akdital’s geographical and medical services expansion, which was executed at a fast pace during Mediterrania’s two-and-a-half-year tenure.
