« OCP Finance »: Fertilizer and Cash to Fertilize Ecosystems

Code name: «le schmilblick ». This object, «rigorously complete, absolutely useless and therefore able to serve any purpose », as Pierre Dac satirically described bureaucracy.

Such references and irony are not typical in meetings around OCP’s board chairman, especially when he unveils a holistic approach that creates opportunities throughout Africa’s agricultural value chain.

From technology to distribution and logistics, including farmer support, structures are already in place and financial partners are investing. This «laboratory » version, currently led by OCP Africa, is a preview of a future strategic investment fund called «OCP Finance».

The Terrab team already grasps the depth and subtlety of the «schmilblick » (far from its simplistic use) and sees that the customized formula is taking shape: this investment vehicle is being built piece by piece to propel the multinational into a new dimension.

In its final form, this «schmilblick» will become a unique vehicle to mobilize financing-across different phases and forms-for a set of interconnected ecosystems revolving around the OCP galaxy.

Industrial Challenge

«Making our strategy public aims to give visibility to potential partners, industrial or financial, so they can find their place and join us on the basis of performance contracts », explains a source close to the group.

«We cannot keep gaining competitiveness without the involvement of private and public operators willing to accelerate and take risks. Companies must take over to support our cost-reduction policy.

Besides giving them long-term contractual visibility, OCP must have the resources and vehicles to support them », adds the source.

OCP aims to revolutionize its supply chain: instead of just placing orders with suppliers who earn commercial margins, the group wants to challenge the performance of established or new companies in innovation and industrialization.

«For example, imagine a company that can meet OCP’s need for hundreds of thousands of filters. Instead of subcontracting simple importation, we can offer the chance to industrialize them, not only with a guaranteed long-term contract but also with seed funding and risk-sharing mechanisms. But it must prove inventive and competitive in the long run », the source explains.

OCP has already proven itself here. Year after year, the group demonstrates its ability to launch, alone or in joint ventures, engineering and industrial champions, as well as handling structures and innovative start-ups shaping Industry 4.0, agritech, and future deeptech.

The impact on the group’s current performance is already visible: just look at the success stories of JESA, Innovx, Green Energy Park, and others.

Financing Vehicle

Replicating the «filter» model across hundreds of components, services, and sectors in OCP’s industrial model (mining, handling, chemistry, energy, water, logistics, etc.) requires mobilizing tens or even hundreds of millions of dollars in investments.

The development plan through 2027, presented to the King in December 2022, means OCP is committing an initial 13 billion dollars in investments and contracts, «with already a good third engaged», according to sources close to the group. This is just OCP’s share for increasing extraction capacity, product sophistication, and everything that entails in energy, water, and input cost control.

«The induced effects are enormous and worth capturing locally through a blend of national public and private capacities, while also attracting international interest», notes a regular at the OCP president’s office.

The mechanism to create this dynamic could be a transversal fund, gathering national and international investors to feed various compartments. For Moroccan institutional investors, the chance to join high-yield projects is real through this portfolio fund.

«Two banks have already shown interest in this vision, and even the Mohammed VI Fund for Investment could follow. But these are just initial contacts. The idea is only starting to gain ground within the board, and a major symposium will be organized to present the concept to all potential partners and refine the structure », the source says.

Structured around specialized sub-funds, the future «OCP Finance» will mobilize private capital and direct it to projects of interest to OCP, aligning with the Kingdom’s strategic visions and programs.

The seven Strategic Business Units currently forming the group’s operational backbone can serve as hubs around which incubators and companies can gravitate. The ecosystem model has already proven successful in Morocco, especially in industries like automotive or aerospace, following major multinational investments.

Given its wide sectoral coverage, OCP could be a catalyst for replicating this success in various fields, especially with «OCP Finance», where the public company uses its prestigious signature to accelerate and optimize capital mobilization.

Is Nutricrops Privatizable?

This is the billion-dirham question, considering the assets transferred by OCP to this structure created in 2022 for fertilizer production and marketing activities. This Strategic Business Unit inherited all chemical activities at Jorf Lasfar and Safi, as well as international offices for fertilizer marketing.

Among them are two entities with private capital: Jorf Fertilizers Company III (50% owned by U.S.-based Koch) and its «twin» JFCV, 40% owned by seven Moroccan institutional investors.

«There is already private equity in Nutricrops», notes a group insider. But direct opening of its capital is not currently planned, despite media speculation.

«The idea discussed at the last Board meeting was about using Nutricrops as a flagship product for the OCP Finance fund structure», clarifies a board member. «The topic will be discussed in a future session with administrators ».

Far from being a «sell-off» of a public asset, the setup aims to strengthen the financial autonomy and agility of OCP Nutricrops, as will be done for the other six SBUs. National sovereignty and state control over the parent company remain fully intact.