Mauritius: Platform for International Investment

Local expertise has emerged for investment fund administration by Management Companies (MCs), as a result of a requirement that funds in Mauritius must have local administrators and cash custodian. Such funds focus mainly on investment in listed and exchange-traded securities of neighbouring emerging markets and developed markets. But global financial services offered by Mauritian MCs also involve direct investment through Special Purpose Vehicles (SPVs) and joint ventures by Indian and ASEAN clients in China, South Africa, and Indonesia. Apart from these corporate services, Mauritius attracts a small but increasing share of the market for private banking and wealth management undertaken by portfolio managers on behalf of High Net-Worth Individuals (HNWIs) with the proceeds parked in Mauritius and administered by MCs.

Though tax treaties provide the foundations supporting the IFS industry, local MCs compete with other IFCs as well as financial centres in home jurisdictions for business generated by such treaties. That competition has led them to expand their knowledge-base by recruiting from abroad, sending their staff for training/secondment to foreign firms, and investing in continuing programmes of on-the-job training and professional development of their human resources.

Highly tax-efficient use of treaties has been made in designing outward Mauritian Foreign Direct Investment (FDI) in Africa and Indian Ocean e.g. in Madagascar and Mozambique. Financial engineering and structuring by Mauritian MCs and banks has become more sophisticated as IFS knowledge has spilled over into the local capital market. Local investment fund products have become more effective and asset management techniques have improved considerably. The rules of the Stock Exchange of Mauritius (SEM) have been revised to encourage offshore fund listing with SEM adopting global best practices in its listing rules and protocols. Mauritius is well located to provide Private Banking and Wealth Management (PBWM) services to emerging entrepreneurs from India, the rest of South Asia, South-East Asia (Asean) and China (whose HNWIs are also served by Hong Kong and Singapore). HNWIs from the Arabian Gulf are more likely to be served by global banks operating from Abu Dhabi, Dubai, Bahrain, Kuwait, Muscat and Doha. But, unlike other centres, Mauritius could specialise in creating African investment portfolios for these clients; especially as Africa now provides the last emerging market frontier that has not yet matured. The large and rapidly growing pool of HNWIs in Asia would be easier for Mauritius to tap than HNWIs in OECD countries, representing old wealth serviced in other established IFCs.

Another IFS domain that provides significant opportunity for Mauritius is insurance and re-insurance. It is unlikely that global insurance companies would use Mauritius as a regional insurance centre for Africa or for asset-liability management. They are more likely to gravitate to South Africa for that purpose. But there is scope for Mauritius to emulate the success of Bermuda and some Caribbean islands as a regional or global re-insurance centre.

As two-way trade between India-Africa and China-Africa grows, it is bound to create more insurance opportunities, (for goods and the vessels they are being carried in), to be captured by insurance companies based in Mauritius (whether locally, regionally or globally owned) for tax as well as operational reasons. New products (such as catastrophic risk, cyclone risk, and weather insurance) also offer opportunities for IFS growth by insurance companies based in Mauritius, working in tandem with international counterparts to undertake the associated actuarial risk analysis and offer insurance products tailored to African markets and for exploiting insurance opportunities created by rapidly growing Afro-Asian economic interaction”.

Percy Mistry’s insights and observations on the growth and opportunities related to Mauritius are fascinating and compelling. The Cim group of companies, a Rogers enterprise, is one of the largest financial services operators in Mauritius. It is the single largest player in the space of fund administration and international corporate services and offers a unique value proposition to investors looking to use Mauritius as a platform for international investment.

Cim offers an integrated value chain of financial products and services including insurance, asset management, stockbroking, property fund management, fiduciary services, tax advisory services, (as part of the Tax and international network), and a range of credit and asset finance products.

Consisting of 14 companies active in the fields described above, Cim has a strong focus on providing integrated financial services. All of the businesses strive to be leaders in their fields. Its management companies administer assets in excess of US $100 billion and have a client base of blue-chip international corporates from around the globe. In excess of 60% of all foreign direct investment onto the Stock Exchange of Mauritius is routed through their stockbrokerage. Cim was the first asset manager to obtain a Foreign Institutional Investors license from the Securities Exchange Board of India. Cim Property Fund was the first retail and commercial listed property investment to be established in Mauritius. Cim’s credit management business was also the first non-banking financial services provider to be accredited to issue and acquire MasterCard in sub-Saharan Africa. y