Mauritius ranks 1st in Africa in the Ease of Doing Business Index of the World Bank and we are strategically positioning ourselves as the preferred International Financial Centre (IFC) for the region. Our financial sector is also undergoing a transformative process by upskilling itself with increased emphasis placed on higher value added services. Building on this aspiration, the Stock Exchange of Mauritius (SEM) is also revamping its offering to match the ever-growing demands of the investor/business community.
While domestic equities are still the most commonly listed instruments a growing number of other asset classes are finding their way on to the SEM. Since the beginning of the decade, more Bonds, Depository Receipts (DR’s), Exchange-Traded Funds (ETFs) and shares of Global Business-licensed companies have been listed on the SEM. This has led to greater activity in terms of volumes traded on the market as well as improved visibility for the country overall.
With news of the upcoming arrival of Afrinex, a subsidiary of the Bombay Stock Exchange (BSE), the Mauritian listing environment is expected to mature further and the Afrinex offer will enhance the country’s competitiveness as a listing and capital raising destination. Leveraging on the BSE’s track record, Afrinex may also have the potential to improve the flow of Indian capital to the African continent. The eventuality of listing and trading of commodities will also be welcomed by investors.
While most of us are acquainted to the textbook advantages of listing equity – be it for facilitating capital raising, reducing the cost of capital and enhancing a company’s image through greater compliance to corporate governance best practices, one of the main advantages of listing is that it is a potent mechanism to unlock shareholder value. Listed shares can be traded freely on an exchange and the added liquidity is usually priced into the value of the shares. Also, market exposure enables companies to attract the attention of sophisticated investors and institutional traders, enhancing demand and value. Hence, listed equity typically trades at a premium vis-à-vis unlisted equity.
Listing equity is traditionally regarded as being a ‘’large’’ company contemplation given the costs and requirements involved. This is not necessarily true in the Mauritian context. Companies with a capitalisation of only MUR 20 million (approximately USD 570,000) can apply to list on the Development & Enterprise Market (“DEM”) of the SEM. The DEM also considers applicants with no track record but who can submit a solid business plan, vetted by an Independent Financial Advisor (IFA). This flexibility allows different companies in various phases of their business cycle to have the option to float their shares.
Many international companies* chose to list on the SEM and in doing so, build their track record by complying to the requirements of the exchange. Leveraging on this experience, amongst other factors, has allowed one particular company (a large Pan-African real estate player) to also float its shares on the London Stock Exchange (LSE). Hence, the Mauritian listing platform is a tried and tested stepping stone to access more developed markets.
As at March 2019, the SEM had more than 200 listed securities, from various local and international issuers across different asset classes with a market capitalisation that exceeds MUR400 billion (~USD11.5 billion). These numbers will only increase with the arrival of the new exchange and the Mauritian platform is well poised to play a more important role in the African continent.
Are interested in having your company listed in Mauritius?
Our corporate finance advisors can help guide you through the entire process. Get in touch with us to see how you can benefit from the many advantages that listing has to offer.
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