The Capital Search | How Mediterrania is making high returns as Akdital prepares for Casablanca’s IPO

North Africa-focused private equity firm Mediterrania Capital Partners on the move to raise its fourth fund, will reap almost all of the money it put on Moroccan healthcare company Akdital via a partial exit.

This comes after the PE company scored the fourth exit from its second fund as it continues to track liquidity events from nearly all remaining portfolio companies from the same investment vehicle.

Akdital has a network of five multidisciplinary and specialized healthcare facilities: the Jerrada Oasis Clinic, the Ain Borja Clinic, the Casablanca International Center for Oncology, the Longchamps Clinic and the Casablanca Ain Sbaâ Private Hospital. It offers a variety of healthcare services such as cardiology, cardiac surgery, neurosurgery, oncology, radiation therapy, critical care, and neonatal care.

Mediterrania had invested in the company in March 2020, acquiring a 20% stake for MAD 250 million through its third fund. It is now selling nearly a third of its stake in Akdital’s initial public offering (IPO), which opens for subscription next week. 200 million MAD are to be deducted.

Mediterrania would deduct 2.4x on his bet just over two and a half years old. This would result in an internal rate of return (IRR), or annualized rate of return, of around 38-40% in local currency, according to The Capital Quest estimates. The returns in euros would be similar, resulting in strong returns for his LPs.

The remaining stake of the PE firm would be worth MAD 400 million at the IPO price.

In addition to a MAD 400 million offer to sell from Mediterrania and other existing shareholders, Akdital intends to raise MAD 800 million through a new issue.

At MAD1.2 billion ($110 million), it is the largest IPO on the Casablanca stock exchange since 2008.

This is the third liquidity move from his current fund, MCP III. Mediterrania had taken a similar partial exit TGCC IPO in December 2021 and exited its minority stake in a financial services company cofina.

Separately, Mediterrania has also exited Casablanca-headquartered MedTech, a group more than three decades old that provides IT and communications technologies (ICT) services through partnerships with international service providers and companies such as Oracle, IBM, Cisco and Alcatel-Lucent. This deal has yet to be officially announced.

This exit comes shortly after Mediterrania achieved another exit from its second fund by unsubscribing from Groupe Scolaire René Descartes (GSRD), a private education group headquartered in Tunis that specializes in providing internationally accredited and homologated teaching programs from pre-school to high school. This exit was accomplished through a management buyout led by GSRD’s leadership team. Mediterrania’s MC II fund invested in GSRD in January 2018.

In September, Mediterrania and EuroMena have monetized a Moroccan consumer bet on a PE-backed MBO. This was also part of her second fund portfolio.

Last year, Mediterrania has left Moroccan money transfer company Cash Plushis first full exit from his second fund.

The company is also in the process of disposing of all but one of its seven portfolio companies from its second fund. The second fund dates from 2014 and invested in eight companies, most of them in 2015-16.

The second fund’s other portfolio companies include Moroccan truck and bus maker CECI, Algerian car rental company Cieptal, Tunisian wheat producer Randa and Moroccan university company UPM.

These exits put the PE firm in a good position to demonstrate liquidity from previous investments as it launches its fourth fund. Mediterrania, who also have a small exposure to Francophone Africa, are looking to raise €350m on their fourth outing.

Dutch development finance institution FMO intends to invest €25 million in the new fund, which joins other returning LPs that have committed or are considering a reinvestment proposal, including the International Finance Corporation (IFC), the World Bank Group’s private sector investment arm, which is wants to invest 20 million euros in the new fund; European Bank for Reconstruction and Development (EBRD). Evaluation of a proposal to sign a 20 million euro check for the new fundThe European Investment Bank (EIB) is considering a proposal to sign a check worth up to EUR 15 million for the new fund.

The new fund can consider an average ticket size of 25 to 50 million euros and create a portfolio of eight to 10 investments.

The PE firm started in 2007 and raised €62 million for its first fund. It then followed up with EUR 120 million for its second fund of the 2014 vintage. Mediterrania’s third PE fund had raised 200 million euros.

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