Mauritius Stock Exchange’s recently launched Africa Board lures investment to the continent

Mauritius continues its upward trajectory as the most desirable business destination in Africa, having been ranked as the 20th top business jurisdiction for 2019 out of 190 countries, according to the World Bank. This is five positions up from last year’s ranking, and more than 50 rankings above South Africa.

Quick to leverage the country’s coveted role as the gateway to Africa, the Mauritian Stock Exchange (SEM) embarked on an internationalization strategy in 2009 which included listing a diversified spectrum of instruments spanning across various asset classes.

What soon became apparent was that an increasing amount of issuers had a specific Africa-focus. Since 2009, about one third of new GBC company/ international securities listed have been Africa-focused and, via SEM’s multi-currency listing, trading and settlement platform, have raised Rs 45 billion (approximately USD 1.3 billion) to fund their activities.

On the back of this, SEM last month launched an Africa Board which aims to showcase those listed issuers and products that have an Africa-centric orientation. As well as reinforcing SEM’s emergence as a viable and dynamic platform for capital-raising, listing and trading of Africa-focused ventures, it also aligns with the national agenda of positioning Mauritius as a financial services hub for Africa.

Soria Hay, head of Corporate Finance at Bravura, an independent investment banking firm specialising in corporate finance and structured solutions which has offices in Mauritius, South Africa, Australia and Namibia, comments that the country – known as an African oasis of political and economic stability – has enjoyed a stable, growing economy for almost 20 years, with an annual GDP growth averaging 3.90% for the period from 2001 to 2018. This year’s GDP growth is at 3.7%.

Hay says, “Consistent economic performance is a result of the country’s willingness to reinvent itself and diversify. From an economy that primarily produced sugar 50 years ago, Mauritius is now positioned as a luxury tourist destination and more recently, a financial services and back-office processing hub.”

A total of 22 securities have been included in the Africa Board at launch, with a total market capitalization of Rs 54.3 billion (around USD 1.5 billion). A total of eight global shares are recorded in its equity register, including Grit Real Estate Income Group Limited, Bravura Holdings Limited, Sanlam Africa Core Real Estate Investments Limited, Tadvest and Dacosbro.

Hay notes that Bravura has advised four of the entities included in the Africa Board. This includes Dacosbro, a property investment holding company, where Bravura acted as corporate advisor on its listing and subsequent capital raisings on the SEM with a transaction value of R1.4 billion.

Bravura also advised Tadvest Limited on its dual listing on the SEM and secondary listing on the Namibian Stock Exchange (NSX), as well as its acquisition of a diversified portfolio of property, agriculture, industrial and other assets.

Hay says the company sees a growing interest in Mauritius by clients eager to invest in Africa but wary of the risk of uncertain African jurisdictions. “Unfortunately, in stark contrast to South Africa, Mauritius provides a secure, stable and well-regulated jurisdiction. The country has a robust infrastructure, an efficient goods market, strong institutions and an educated workforce.”

However, Hay adds that the country has not been without its challenges. “In the past, Mauritius has been faced with criticisms levelled at it around a low tax regime making it a potential tax haven. But as its economy matures, Mauritius has committed to policy strengthening combined with the implementation of business reforms to ensure any weaknesses are eradicated.”

A recent example has been the initial inclusion of Mauritius on a list compiled by the Organisation for Economic Co-operation and Development (OECD) of those CRS-committed countries that offer residence and citizenship by investment (CBI/RBI) schemes which could potentially be detrimental to the integrity of the Common Reporting Standards (CRS).

“Whilst Mauritius was initially identified as one of the countries offering high-risk CBI/RBI schemes,” explains Hay, “the OECD overturned its assessment shortly thereafter and subsequently removed Mauritius from the list. This is a clear recognition of Mauritius’ commitment to swiftly responding and acting in order to reinforce its stance on international tax avoidance and evasion. It gives out a positive signal to the international investor community.”

Hay concludes. “The launch of the Africa Board is an exciting opportunity for investors wishing to invest in an African country that provides policy certainty and a reliable jurisdiction. The success of this initiative will serve to strengthen both the SEM and Mauritius as a potentially lucrative and business-friendly environment.”

Categories: Mauritius, Transactions, News
Published: 19 November 2018

2018-11-19T13:36:20+00:00