Mauritius Stock Exchange aims for growth, and possible link with the JSE

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Mauritius is one of Africa's great success stories, with a booming, diversified economy, solid and stable government, and exciting prospects. As a result of this economic success, the Mauritius Stock Exchange is increasingly attracting new listings and developing into a deep and liquid market. According to Senil Benimadhu, who is the Chief Executive of the Mauritian Stock Exchange (MSE), the bourse has attracted eight new listings, as well as a number of new debt instrument listings and global investment funds. The MSE is also looking to build a closer relationship with the JSE, perhaps even developing a platform to allow cross-trading in both exchanges. This is an exciting development – if South Africa and Mauritius are able to develop closer financial and economic relations, it will benefit both. – FD

ALEC HOGG:   A week ago today, the 4th of February saw the listing of CIEL Limited on the Mauritian Stock Exchange.  The company has undergone rebranding as well as a merger in the last little while as it prepared for listing.  Arnaud Dalais, the Chairman of CIEL and Senil Benimadhu, who is the Chief Executive of the Mauritian Stock Exchange, joins us now from St. Louis.  Arnaud, congratulations on the 4th of February; it's been one week since the company listed.  Are you happy that you've done the right thing – you haven't gotten yourself onto a treadmill that you might regret?

ARNAUD DALAIS:  Thank you and hello.  I must say that through this process and this merger; we managed to put all our entities under one hat, which is CIEL Limited.  We now ended up being much stronger financially also, I must say, very well diversified as an entity.  We also managed to get our listing on the first market of Mauritius' Stock Exchange, which is a very good thing because since we announced this restructuring we saw our share price from six months ago rising to almost 45 percent, so the move has been very well accepted by the market.

ALEC HOGG:   Many conglomerates like yours – as you say, well-diversified companies – are more in fashion nowadays.  Is this one of the reasons that spurred you to take this route?

ARNAUD DALAIS:  Well, we evolved a lot from a small Mauritian sugar industry company 100 years ago into, as you say, an important conglomerate locally and also in the region through our investments into textiles, hotels and resorts, financial services, and healthcare.  This gives us a very strong foundation and a very solid base where we can really develop our activities in the region, and even on the international front.  This is quite positive.  I think it's worth the effort.  It's working well and it allows us to have a balance in our revenue trend over the years.

ALEC HOGG:   Sunil, from your perspective, could you just update us on the number of new listings that have been attracted to the Mauritius Stock Exchange recently?

SUNIL BENIMADHU:  Well, since 2009 the Mauritian Stock Exchange has embarked on what we call an internationalisation strategy, which aims at diversifying the number of listings outside of the Mauritius business landscape.  This has proved to be very successful, but of course, we're also pursuing – very actively – the listing of local companies like CIEL, and we are very happy that CIEL has joined us.  In terms of numbers, over the past four years we've had 23 global funds coming to our market.  We have about five local listed companies, three global business companies, two specialist debt instruments that have listed, and we've had about six corporate debentures that have listed.  The last four years have therefore been extremely active for the Mauritian Stock Exchange, and has confirmed that we are pursuing the right path in terms of our development strategy.

ALEC HOGG:   From what you've shared with us now, it does appear as though the capital markets are deepening if you have all of these, or been able to attract so many listings.

SUNIL BENIMADHU:  Yes definitely, the Mauritian Stock Exchange's total market cap currently stands at about MUR280 billion, which is roughly about 85 percent of the country's GDP, which makes Mauritius the second market in Africa after the South African market in terms of the market cap to GDP ratio.  What this means is that the market is very reflective of the economy, it's becoming increasingly so, and with the listing of CIEL, which has added an additional MUR9 billion to the market capital – the official market – I think we're going in the right direction.  We think that a company like CIEL will enhance the trading volumes and liquidity on the market.  In fact, since its first day of listing on the 4th some 4.7 million shares have already exchanged hands over a six-day period, so we are very optimistic about it, we welcome that kind of initiative, and we look forward to further listings like CIEL on our market.

ALEC HOGG:   Arnaud, from your perspective, if you look at the way your business operates, is there a direct correlation with the Mauritian economy, given that you are so nicely diversified?

ARNAUD DALAIS:  Yes, all our sectors where we are invested are the main pillars of Mauritian economy.  I've mentioned them already: we have textiles, sugar, financial services, tourism, and now healthcare and we have great scope for development not only in Mauritius but also in the region and the international front and being listed now, on the first market Stock Exchange, gives us much more firepower to achieve our goals.

ALEC HOGG:   I guess from a non-Mauritian perspective, if one believes the Mauritius economy is going to continue growing at 3.5/4 percent – hopefully, more in future – then that can translate into the likely real growth for your business.

ARNAUD DALAIS:  Sure, but we can't rely solely on the Mauritian economy because we now have factories in many places: in East Africa mainly, Tanzania for example, where we are invested in the sugar industry near Kilimanjaro and we are also investing now in a project in Swaziland.  We are also working at developing our activities in the textile sector in India.  We have factories in Bangalore and Bangladesh.  We are also prospecting Southeast Asia, so our future is linked with Mauritius, for sure, because we have very strong Mauritian roots.  We also have mainly international front's in the region.

ALEC HOGG:   Sunil, just to close off with, as far as the Mauritian Stock Exchange is concerned, you've had some kind of get-together, or at least discussions, with the Johannesburg Stock Exchange.  Is it likely that it will be easier in future for people in the capital centre of the continent here in Johannesburg, who would be more easily able to trade in Mauritian stocks?  The likes of CIEL, seems…  I'm sure that people watching this would be quite attracted by that.

SUNIL BENIMADHU:  Well, investors sitting in South Africa can already trade on the Mauritian Stock Exchange and buy shares like CIEL and others that are listed on our exchange, because Mauritius is a very open economy.  There is no exchange control.  There's free entry and free exit in terms of investments, so the market is already open for international investors, South African, and other international investors.  As we speak, foreign investors already account for more than 45 percent of the daily trading volumes on the Mauritian exchange.  In saying this, we are certainly trying to work closely with the Johannesburg Stock Exchange to find ways and means of using technology to cross-link our markets with the expectation that over time, brokers sitting in South Africa could directly trade from South Africa into our market and vice versa.  There would also be expectations that this will certainly deepen/broaden our markets, increase the number of players operating in our market, and make the market more lively, more active, more liquid, and eventually help our companies that are listed like CIEL, to use the platform to raise capital to fund their ventures within and outside of the region.

ALEC HOGG:   Well, there are all 'talks about talks', but do you have a timeline when you are likely to be able to conclude this with the Johannesburg Stock Exchange?

SUNIL BENIMADHU:  We've already engaged in terms of the project.  It's a question of finding the right technological outfit, which would allow us to cross-link our markets in a very cost-efficient manner so we're already working on that.  It's difficult at this point in time for me to give you a definite date, bur of course, we are doing our best to make this happen within the foreseeable future.

ALEC HOGG:   We hope that 'foreseeable future' is this year rather than into the next decade.  That was Arnaud Dalais, the Chairman of CIEL and Sunil Benimadhu, the Chief Executive of Mauritius Stock Exchange.

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