Focus on the Mauritius Stock Exchange (SEM)
Mauritius is fortunate indeed to be home to the SEM.
It is a well regulated stock exchange supporting a country with a vibrant local economy. With Mauritius now well recognised as the gateway to Africa, it will be interesting to see how the SEM comes to play a role in that development. For the moment it has primarily served the domestic economy, but there is no reason that it cannot serve a broader role in serving investment into and out of Africa in general.
Osiris has a particular interest in the SEM, as we have been very involved in a number of listings on the SEM, primarily of GBC1’s which have listed under Chapter 18 of the Stock Exchange Rules. We have similarly been involved in a number of listings on both the Bermuda and Luxembourg exchanges. This has given us an insight into the workings of all these exchanges, but also allowed us to highlight some of the factors that make Mauritius interesting and useful. We highlight some of these below:
Mauritius network of double tax treaties means that a company listed on the SEM has the opportunity to build a business with a real presence and ability to network outwards, particularly into Africa. This offers an advantage over say the Bermuda Stock exchange which lacks the treaty network offered in Mauritius.
The SEM has a market capitalisation of some $6 billion. Whilst this is still relatively small compared to say the JSE at $1 trillion and ranked at 18th in the world league of exchanges, the SEM has a number of attractive features that the JSE lacks. For example:
A company may list with any functional currency whilst on the JSE it may only list in Rands;
A company that lists on the SEM is not subject to exchange controls;
The SEM is a member of the World Federation of Exchanges, as are the JSE, the Bermuda and Luxembourg exchanges. This is important as membership means that once listed on one of these exchanges as a primary exchange, it is possible to do a secondary listing on one of the other exchanges. This feature for example is lacking in the Cayman Islands where the Cayman Islands Stock Exchange is only an affiliate member. The SEM, together with the JSE and the Nigerian stock exchanges, are the only member exchanges in Africa.
This interaction with other exchanges is important, in that the SEM has now played host to a number of primary listings which are now listed on other exchanges, primarily the JSE but increasingly other exchanges in Africa as well.
The SEM in terms of chapter 18 of its rules allows GBC1 companies to list with some special dispensations, for example an initial waiver with regards to shareholder spread. Debt and specialist equity issues may also be listed under this chapter. This dispensation is of great value to a start-up business seeking to gain recognition before broadening its capital base. Other exchanges, for example the Luxembourg exchange, require a diverse shareholder base on listing. This is not easy to achieve prior to listing, and the SEM dispensation here makes it very attractive.
It is also possible to list ETF’s and other funds and there are already some 30 funds listed. Other exchanges have really used this as the core of their offering, for example in Ireland. It will be interesting to see if the use of the SEM develops into a regionally focused fund and ETF offering in preference to those exchanges.
The SEM is also well served by a domestic base of professionals. All the major accounting firms are represented, as are many major law firms and banks. There are also 11 investment dealers operating on the SEM which offer all the flexibility needed.
Osiris sees an exciting future for regional exchanges in general and the SEM in particular, and invites anybody interested in more information relating to the SEM to contact us.
Should you require further information then please contact:
email@example.com/ocs | www.osiristrust.com
Telephone: +230 650 4030