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EBRD invests in the Moroccan bond issuance by Zalagh Holding

By Nibal Zgheib

First local currency corporate bond with IFI subscription

The EBRD invested MAD 125 million (equivalent of €11 million) by subscribing to a bond programme issued by Zalagh Holding, a leading Moroccan agribusiness group. This is the first local currency corporate bond issuance in Morocco supported by an international financial institution (IFI). Zalagh is the largest integrated poultry player in Morocco and operates across the entire poultry value chain, from grain trading and animal feed production to meat processing.
The EBRD’s participation was complemented by a public bond issuance of MAD 350 million, primarily subscribed by Moroccan institutional investors. The total bond programme of MAD 475 million (equivalent of €43 million) will not only be used to fund Zalagh’s modernisation and expansion programme, which focuses on vertical integration, but will also finance additional working capital needs and optimise the group’s balance sheet. With its expansion programme, Zalagh is planning to tap Morocco’s potential growth in the animal feed and meat sectors, with benefits for both Moroccan farmers and consumers.
Funded by the EU’s Neighbourhood Investment Facility (NIF), technical assistance activities will cover an energy efficiency audit, the modernisation of business processes and the upgrade of quality and environmental certifications.
Gilles Mettetal, EBRD Director, Agribusiness, said: “This investment is a showcase of what the EBRD can offer as it combines our role as a pioneer in the financial sector with our expertise in the agribusiness sector. We are proud to support a strong local producer, which will also benefit the wider economy.”
In addition, Zalagh is the first private corporate in Morocco outside of the financial sector to apply for an issuer rating from a recognised international rating agency, Fitch, ahead of a local bond issuance. By investing in this bond and supporting new standards that bring practices of local bond issuances closer to international standards, the Bank aims to play an increasing role in the development of the Moroccan capital markets.
Laurent Chabrier, the EBRD Director for Morocco, said: “This project is our first local currency financing. Corporate bonds are not yet common among Moroccan companies outside of public companies, financial institutions and the real estate sector. This transaction sends a strong signal that bonds are a viable source of funding for the Moroccan private corporate sector.”
Ali Berbich, Zalagh Holding’s Chief Executive Officer, said: “We are proud of welcoming the EBRD as a financial partner in a milestone transaction of many firsts. Indeed, this is the EBRD’s first investment in dirhams, for a first-time rated industrial issuer. This transaction completes the financing of our investment programme, which we are eager to implement in the coming years.
To date, the EBRD has invested €380 million in 17 projects in Morocco in addition to €130 million worth of trade facilitation credit lines with local banks, and has provided technical assistance support to more than 135 small and medium-sized local enterprises.
Zalagh Holding is the first integrated group in the poultry industry in Morocco. It covers the whole value chain of the poultry sector. Founded in 1974 by Mohammed Chaouni and subsequently developed by Fouad Chaouni, the group recently launched an ambitious strategy, mainly through mergers and acquisitions, to diversify and integrate its activities and become the largest integrated poultry player in Morocco. Zalagh Holding employs more than 1,700 people and has 15 subsidiaries. It is organised across five key business segments: import of agricultural raw materials, animal feed, hatching, breeding, slaughtering of poultry and production of finished poultry meat products.
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