An attractive multi-asset class capital-raising and trading platform for African products in Mauritius

Transcription

1 The Stock Exchange of Mauritius An attractive multi-asset class capital-raising and trading platform for African products in Mauritius Presented by: Sunil Benimadhu Chief Executive Private Equity Mauritius 2012 Your Gateway to African Opportunities 17 & 18 September 2012 Intercontinental Resort, Balaclava

2 Presentation Outline The shift in the balance of economic power and Africa s rise The changing world economic momentum: A gradual shift of international assetallocation in favour of Africa Why SEM and what is the SEM s competitive edge as a capital-raising and trading platform for African ventures? SEM s recent initiatives to capitalise on Africa s rising Examples of recent capital-raising on the SEM The SEM: A powerful value-creation platform for listed companies Projecting into the future: SEM s expectations in five years

3 The Shift in the balance of economic power and Africa s rise Top 10 Economies Country GDP (PPP) ($ tn) Rank Country GDP (PPP) ($ tn) United States India China China Japan United States India Indonesia Germany Brazil Russia Nigeria 9.51 Brazil Russia 7.77 United Kingdom Mexico 6.57 France Japan 6.48 Italy Egypt 6.02 Source: International Monetary Fund; The Wealth Report 2012

4 The changing world economic momentum: A gradual shift of international asset-allocation in favour of Africa Growth in the developed world looks anemic at best and international investors are on the look for superior returns outside of the traditional markets Emerging Asia and Latin America have benefitted from the first wave of assetallocation shift during the 1990 s and 2000 s Africa is the last-growth frontier that will benefit from the second wave of asset-allocation shift The setting up of dedicated Africa funds, Africa-focused structured products and PE funds is on the rise and will intensify Fundamental shift to the current static perceptions of African Exchanges being fragmented and illiquid Global brokers/liquidity providers who, have so far overlooked African stock markets, will growingly turn to these markets as the last financial Eldorado Mauritius and the Stock Exchange of Mauritius (SEM) are ideally positioned to capture the growing international asset flows into Africa

5 Why SEM and what is the SEM s Competitive edge as a capitalraising and trading platform for African ventures? SEM is a multi-asset class internationalised Exchange platform that allows African issuers to list a wide spectrum of financial instruments and raise capital through a wide variety of modes ( shares, bonds, funds, Depositary receipts, convertible instruments, Exchange Traded funds ( ETF s) ) SEM facilitates international capital-raising by African issuers through its multi-currency listing, trading and settlement platform ( USD, EURO, GBP ) - Potentially provides a 4% to 8% currency conversion savings to international investors trading in African securities - Hedges the international investors against African currency risks and eliminates need to resort to currency hedging instruments SEM has been a powerful value-creation platform for many companies that have chosen to list on its platform [USD total return range from 3,000 % to 7,540 % for Top 10 companies] SEM has an Exchange architecture that opens us the global institutional investors space to African issuers. 40 % of annual market turnover is from global institutional investors. SEM is sub-saharan Africa s ( ex JSE ) only WFE member Exchange and was awarded Africa s 2011 Most Innovative Exchange by Africa Investor at the NYSE Clearing and settlement on SEM done in line with international standards

6 Why SEM and what is the SEM s Competitive edge as a capital-raising and trading platform for African ventures? The SEM is positioned at the very heart of the convergence point of demand-side flows and supply-side opportunities for investments into Africa The demand-side flows are those of the Africa-dedicated funds, Africa-focused structured products that are and will growingly be established in the Global Business sector (GBS) in Mauritius to invest in African ventures Demand-side flows can also be boosted by attracting order flows from remote global brokers The supply-side opportunities will emanate from Global Business companies + other companies incorporated in Mauritius for outbound investments into Africa. SEM s highly flexible/cost competitive listing framework and its state-of-the art multicurrency trading provide the winning capital-raising platform that enables an efficient interaction of the above demand and supply forces In a nutshell, SEM completes the value chain process that will position Mauritius as a one-stop platform for incorporation, structuring, listing, capital-raising and trading of African ventures

7 SEM s recent initiatives to capitalise on Africa s rising Introduced a highly competitive and flexible listing framework for - Junior mining/exploration companies - Global funds -Global Business companies -sponsored/unsponsored Depositary Receipts - Exchange traded funds - specialist debt instruments Setting up of a new trading technology that: 1) Opens the space for foreign brokers/liquidity providers to connect directly to our trading systems, and 2) Cross-links our market with other markets in the region Introduce the concept of remote membership to attract foreign brokers, foreign participants to our market and global order flows to SEM s trading platform

8 SEM s attractive framework for junior mineral/exploration companies Growing demand for Africa s resources from the new resource-hungry economic powerhouses of the world (China, India, Russia, Brazil) is expected to result in the setting up of new vehicles/structures to tap into Africa s Mineral resources To capture these new opportunities, the SEM has come up with a highly competitive listing framework for junior Mineral/Exploration companies Highly flexible entry requirements, pitched to accommodate the specificities of junior mineral/exploration companies Minimum market capitalisation USD 700 K Absence of track-record can be compensated by Business plan covering 3 years Three-year period given to satisfy free-float + no. of shareholders requirements A compelling listing fee structure Strict compliance with international standards of disclosure

9 SEM s attractive framework for Funds investing in Africa Salient changes introduced in the Listing Rules to facilitate the listing of a wide variety of fund structures and collective investment schemes (CIS) Definition of Investment entity widened to include a wide spectrum of funds and CIS (Professional CIS, Specialised CIS, Expert funds, Global schemes, closed-end funds, openended funds, and other types of CIS) In essence, the listing rules have been tailored to match the requirements of funds/cis which are seeking a technical listing, as well as the requirements of funds seeking a full listing Technical Listing To gain visibility Requirements of clients to invest in the fund Trading in the underlying is not the primary motive of the fund Fund may not meet requirements linked to free-float Full Listing Primary motive of listing is trading/liquidity/market pricing Enhanced visibility and marketability of funds Free-float requirements met Initial Listing Fee and Annual Listing Fee for funds set at very competitive levels of USD 1,500 each

10 SEM s attractive framework for Depositary Receipts focused on Africa DR programmes worldwide have experienced a strong growth as they offer a number of advantages to issuers and to investors SEM has introduced rules which allows it to list/trade both sponsored and unsponsored DRs SEM s DR programme provides the African issuer with the flexibility of maintaining its home country listing and listing its DR programme on SEM s multi-currency platform to raise capital from international investors who are averse to African currencies risks Listing on a WFE-recognised Exchange enhances issuer s reach to international investors Listing fees are only applicable to the value of the DR s listed on SEM

11 SEM s attractive framework for Global Business Companies (GBC1) investing in Africa Mauritius has grown during the last two decades as an attractive platform for the incorporation/structuring of Global Business companies to invest in different regions of the world, including Africa Considering some of these Global Business companies as potential candidates to listing, SEM has come up with flexible listing rules targeted towards these Global Business companies Key benefits for Global Business Companies to list on SEM Increased marketability w.r.t institutional investors Enhanced visibility & attractiveness and flexibility w.r.t investors who can only invest in listed companies Added flexibility w.r.t exchange control issues Listing on a well-recognised Exchange like SEM provides additional comfort to investors SEM is committed to a speedy processing of applications with a turnaround time of two weeks once the final application is complete

12 Date of Listing on SEM June 2012 Examples of recent capital raising on the SEM Name Rockcastle Global Real Estate Company Limited Investment Focus Capital raised (USD) Global 118 million * *10 million raised on JSE (dual-listing) Jun 2011 TC Mauritius Holdings Sub-saharan 75 million Africa Oct 2010 The Four Elements PCC Global 28 million The Meteor Property Fund Dec 2010 JPT Capital PCC Australia 26.6 million Feb 2009 Africa Sustainability Fund Africa 23.3 million Oct 2008 Global Diversified Fund PCC Europe 13.2 million Mar 2012 Evisa Investments Ltd Kenya 11.4 million Apr 2012 Lancelot Global PCC Commodities Partners Invest Commodities Partners Invest Africa Commodities Partners Invest Middle East Global 1.9 million Sept 2011 Theseus Property Fund Mauritius 823,000 July 2011 ACM India Focus Fund India 610,143 Total capital raised by local companies on SEM since 2010: USD 215 million

13 The SEM: A powerful value-creation platform for listed companies Top Ten Companies in terms of Annualised Total Return ( as at 31st December 2011) Company Date of Total Return (%) Annualized Total Listing (USD terms) Return (%) (USD terms) The Mauritius Commercial Bank Ltd 05-Jul-89 7, Vivo Energy Mauritius Ltd 13-Nov-91 4, Gamma Civic Ltd 30-Nov-94 2, ENL Land Ltd 24-Jan-90 4, Mauritius Union Assurance Co. Ltd 14-Dec-93 2, Mauritius Oil Refineries Ltd 21-Feb-90 3, United Basalt Products Ltd 05-Jul-89 4, The Mauritius Development Investment Trust Co. Ltd 05-Jul-89 4, Rogers & Co. Ltd 27-Jun-90 3, State Bank of Mauritius Ltd 30-Jun-95 1,

14 The SEM: A powerful value-creation platform for listed companies Comparative Performance Analysis: SEM v/s a few other markets ( ) Exchange CAGR % SEMDEX (Stock Exchange of Mauritius) , Bovespa (Brazil) 13, , S&P/CNX 500 (National Stock Exchange of India) 1, , FTSE/JSE All Share (South Africa) 10, , S&P/TSX Composite (TMX Group) 7, , SSE Composite Index (Shanghai Stock Exchange) 1, , All Ordinary Price (Australian SE) 3, , Dow Jones (NYSE) 10, , CAC-40 (France) 4, , (3.7)

15 Private Equity Exit through African Stock Exchanges: Already a reality Company Investor IRR Multiple Entry P/E Exit P/E Equity Bank Africap 43% 2.2x 7.7x 12.3x Ecobank ECP 208% 3.0x 7.3x 11.5x Continental Reinsurance Starcomms Nigeria RP Capital 52% 2.8x 3.6x 60x Actis Capital 46% 2.9x - - Source: Enko Capital

16 Projecting into the future: SEM s expectations in five years SEM internationally recognised as a competitive, attractive listing and capitalraising platform for African issuers The breakdown of listings on SEM will be comprised of more international funds, international issuers, African issuers and other Africa-focused structured products than of local issuers Value of products traded and settled in USD, Euro and GBP in SEM would confirm the internationalised status of SEM The market capitalisation/gdp ratio (currently at 70%) would be way above the 100% level, due to the growing weight of non-local issuers, including African issuers, on the SEM The SEM platform will be growingly used to channel investment flows from USA/Europe/Asia into Africa The SEM will make a meaningful contribution to the growth and development of the financial ecosystem of Mauritius and contribute to the emergence of Mauritius as a vibrant one-stop service platform for African ventures (incorporation, structuring, capital-raising, listing, trading of investment vehicles)

17 THANK YOU