Corporate Finance Between Introduction to Stock Exchange and Private Equity: Case Study of Construction Public Works Sector (RMd Economics Management & Social Sciences)

Summary

• Companies listing via an IPO through a capital increase of at least 20% benefit from a 50% corporate tax reduction for 3 consecutive years.p.7
• As of 31/12/2020, the Casablanca Stock Exchange recorded a share capital of 387 517 900 MAD.p.12
• Morocco's development targets for 2035 aim to boost stock market capitalization to 70% of GDP and expand the number of listed companies to 300.p.13
• An illustrative DCF valuation with estimated 2024 cash flows of 20 million MAD at a 10% discount rate yields a terminal value of 272.77 million MAD.p.18
• Private equity funding allowed the construction firm to add over 3 500 new jobs since 2018, increasing its total staff to 11 700.p.21
• Equity valuation under the DCF model follows the basic principle that Equity Value equals Enterprise Value minus Net Financial Debt.p.10

Key insights

1. Consolidating governance and financial structure through private equity prior to an initial public offering enhances company stability and overall performance.p.1
2. Moroccan tax regulations grant a 50% reduction in corporate tax for 3 consecutive years to companies conducting an IPO via a capital increase of at least 20%.p.7
3. National targets for 2035 seek to position the Casablanca Stock Exchange as a major regional driver by reaching 300 listed companies and market capitalization equal to 70% of GDP.p.13
4. Financial valuation practices in private equity and IPO transactions rely heavily on DCF modeling complemented by EV/EBITDA and EV/EBIT multiples.p.11
5. The Casablanca Stock Exchange held a share capital of 387 517 900 MAD at year-end 31/12/2020.p.12
6. Private equity backing enabled construction group TGCC to scale operations, creating over 3 500 jobs since 2018 to reach 11 700 employees.p.21
7. Adopting IFRS financial reporting standards and establishing specialized board committees significantly improve transparency and investor trust.p.21