CFG Bank's Younès Benjelloun Advocates for Accelerating IPO Dynamics in Casablanca Stock Exchange
Historical Context of the Casablanca Stock Exchange
Younès Benjelloun, CEO of CFG Bank, provided a historical perspective on the current state of the Casablanca Stock Exchange, noting several significant 'waves' in its development. He highlighted the post-Moroccanization period, the privatization phase of the mid-1990s, and the surge of private sector listings in the mid-2000s.
Benjelloun pointed out that between 2006 and 2008, the market experienced a notable influx of initial public offerings (IPOs), a stark contrast to the current pace. 'Today, we are unable to achieve even ten IPOs per year,' he remarked, stressing that this limitation poses a critical challenge for a market aiming to broaden its issuer base and enhance depth.
Trends in Listed Companies
The CEO also discussed the evolution of the number of listed companies, recalling that the market had approximately 75 firms at the beginning of the 1990s. Following the reforms initiated in 1993, there was a significant decline, with many companies delisting, leading to a low of 45 listed entities.
He noted a gradual recovery that has brought the total to nearly 80 listed companies today.
Recent Fundraising Activities
In terms of fundraising, Benjelloun highlighted that around ten IPOs have been conducted over the past five to six years, generating close to 5 billion dirhams in capital increases during these offerings. This figure is complemented by subsequent secondary offerings from the same companies, bringing the total equity raised to nearly 10 billion dirhams.
He emphasized the distinction between capital increases and the sale of existing shares, asserting that 'the primary role of the stock exchange remains the financing of companies,' while expressing no fundamental objection to IPOs conducted through share sales.
Comparing Stock Market Financing and Bank Credit
Responding to frequent comparisons between funds raised in the stock market and bank credit volumes, Benjelloun deemed such comparisons 'incomparable.' He reiterated that the stock market is a platform for equity financing, whereas bank financing pertains to debt.
According to him, equity plays a crucial role in enhancing companies' ability to access additional financing sources.
Challenges in the Primary Market
Benjelloun also addressed the challenges faced by companies looking to list, noting that many are ready to take the plunge but encounter scheduling constraints. 'Companies sometimes have to wait their turn,' he explained, pointing out that IPOs tend to cluster around specific annual windows, such as June/July and November/December.
This situation, he argued, mechanically limits the frequency of operations.
Legal Framework Adaptation
The CEO raised concerns about the legal framework governing market operations, questioning why the current law is over 30 years old. He believes that regulations should evolve in tandem with financial practices.
He advocated for clearer differentiation between the requirements for new issuers and those for already listed companies, suggesting that a firm with publicly available financial information should not face the same procedural burdens as a first-time issuer.
Proposing a Fast-Track Mechanism
Benjelloun proposed a 'fast-track' mechanism to streamline secondary operations, emphasizing that these constraints are more related to ecosystem dynamics than to individual responsibilities.
In this context, he downplayed the notion that infrastructure is the sole variable for adjustment, acknowledging the need for investment to better handle volume spikes while recalling that the Moroccan market has previously operated under much more rudimentary technical conditions.
He cited the early years of opening to international investors in the early 1990s, when certain transactions were executed 'with a piece of paper and a pen.'
