“We have seen an increased appetite for investors willing to consider Mauritius for Reinsurance and captive insurance”

In a dynamic gathering at the 7^th edition of the Pension Funds and Alternative Investment Africa Conference, Ken Poonoosamy, Chief Executive Officer of the Economic Development Board (EDB), highlighted Mauritius’ pivotal role as the ‘official partner’ of the event. His address encapsulated profound insights into the evolving financial markets and the burgeoning opportunities that lie ahead.

Reflecting on the past two years, Ken Poonoosamy acknowledged the significant challenges that have beset the global financial markets. With geopolitical uncertainties, inflationary pressures, and rising interest rates, the landscape was fraught with complexities. However, amidst these challenges, 2023 emerged as an extraordinary year, defying expectations with positive outcomes across various asset classes. While the global economy managed to avoid recession, the tightening of monetary policies and weaknesses in certain economies signal a potential transition period in the capital markets. In this context, equities may face vulnerabilities, but fixed income and alternative investments are poised to offer diversification benefits.

“In the midst of this challenging operating environment, 2023 might go down as one of the most unusual ever in financial markets – mainly because everything seems to have worked out positively despite these turbulences, and many predictions turning out to be wrong. Take equity markets. World stocks are more than 20% higher despite the highest interest rates in decades, and a mini crisis that wiped out one of Europe’s best-known banks – Credit Suisse – along with a few smaller ones in the United States. Bitcoin is up nearly 160% on the year. Some emerging market bonds have achieved triple-digit gains, while the seven tech giants have seen a 97% surge when lumped together. So, where do we go from here?” the CEO of EDB Mauritius said. 

Highlighting the resilience of the alternative investment industry, Ken Poonoosamy cited the performance and forecasted growth in Assets Under Management (AUM). Mauritius, renowned as a preferred fund domiciliation centre, boasts over a thousand funds, with collective AUM exceeding USD 130 billion. The island nation continues to attract global alternative asset managers, offering access to Africa’s burgeoning capital pool and growth opportunities.

With Africa emerging as a hub for alternative investments, Ken Poonoosamy underscored the significance of initiatives like decarbonisation 2050 and infrastructure development. African pension and social security funds, bolstered by their growing size, present avenues for investment in sustainable projects, thereby contributing to the region’s development goals.

Mauritius continues to be a fund domiciliation centre of choice, and boasts around one thousand funds, with collective Assets under Management in excess of USD 130 billion

In the realm of cross-border investments, Mauritius has long served as a bridge, facilitating investments through its International Financial Centre. Ken Poonoosamy highlighted the Variable Capital Company (VCC) structure as a key initiative, offering flexibility for investors and benefiting from Mauritius’ extensive double taxation agreement network.

Moreover, Mauritius’ investment-friendly ecosystem has attracted Development Finance Institutions (DFIs) and impact-driven financiers, positioning the island as a platform for managing African impact funds efficiently. The jurisdiction’s advantages, including treaty benefits and tax exemptions, further enhance its appeal to investors across sectors like re-insurance, captive insurance, digital banking, and trade financing.

“Mauritius continues to be a fund domiciliation centre of choice, and boasts around one thousand funds, with collective Assets under Management in excess of USD 130 billion and a sizeable number of them from development finance institutions and sovereign wealth funds. A number of global alternative asset managers have set up their offices in Mauritius. From Mauritius, alternative asset managers can tap into the capital pool and growth opportunities in Africa and the region.

“As per JP Morgan, The Alternative Investments Meta, Outlook 2024, investment in infrastructure, real estate and alternative assets are seen as potential buffers against market volatility, and Africa does provide these opportunities. With various fund structures available in Mauritius, such as the Variable Capital Company or VCC, and Limited Partnerships, alternative asset managers can use them as investment pooling vehicles and muster funds for investments.

In particular, the VCC can be used either for an open-ended fund for liquid strategies or closed-end private funds. And as a corporate structure, a VCC can benefit from Mauritius’ wide double taxation agreement (DTA) network for its investments in Africa. The VCC has started to see positive traction with both traditional and alternative managers. We have some 15 VCCs to date already fully licensed by the Financial Services Commission and another 15 in the pipeline. 

 It is worth noting that many Development Finance Institutions (DFIs) and impact-driven financers including the British International Investment (BII), Proparco, Dutch Development Bank (FMO), KfW, Norfund, OPIC, GroFin and Bigen Group, are currently using Mauritius as a platform to set up and manage African impact funds in an efficient and cost-effective manner while benefiting from the jurisdiction’s investment friendly ecosystem. Funds structured in Mauritius are entitled to treaty benefits alongside the partial tax exemption, no capital gains tax, no withholding tax on dividends and interest, and no exchange control where funds can be repatriated freely. In addition, we have also seen an increased appetite for investors willing to consider Mauritius for reinsurance and captive insurance. Moreover, International banks specialists in digital banking and trade financing are also prospecting the jurisdiction,” the CEO of EDB Mauritius highlighted.