Hon.

Sudarshan Bhadain
Bhadains Speech for
The 5th Annual Private Equity Africa
Africas LP-GP Summit 2016
London, 9th June 2016

Tom Minney, CEO of African Growth Partners and Conference Chair,

Distinguished guests
Ladies and Gentlemen

All protocols observed. A very good morning to you all.

At the very outset, allow me to commend Private Equity Africa

Magazine for this excellent initiative. It is indeed a pleasure for me to
address such a gathering of some of the most active players in the
Private Equity world.

Ladies and Gentlemen

Gentlemen, PE investments have played a major role in
shaping up economic progress and growth across emerging markets.
Your vast experience, in investing in a plethora of portfolios, is

increasingly

being

called

in

terms

of

identifying

investment

opportunities in emerging markets.

Statistics show that emerging markets investment has grown by around

11% as a percentage of global private equity investment in recent years.
Across all emerging regions, investors committed USD 33.75 billion to
around 1,200 deals. Fundraising has rebounded in Latin America, and
with regard to Africa
Africa, I am informed that a record amount of new
money more than USD 4 billion - has been committed.

Mauritius, Ladies and Gentlemen, has over the years, become the ideal
platform for housing private equity investments in our part of the world.

Our jurisdiction provides a conducive eco-system which includes first

and foremost political, social and economic stability, and this is why
Mauritius has consistently been ranked first in Africa whether it is in
terms of
Ease of Doing Business by the World Bank,
Good Governance with respect to the Mo Ibrahim Index,
Transparency International Corruption Perception Index, and the
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 Economic Freedom by the Index of Economic Freedom.

We also have a well-established legal, regulatory and institutional

framework
Highest court of appeal is the Judicial Committee of the Privy
Council in the UK;
International arbitration We hosted the 23rd ICCA Congress held
last month in presence of UN Secretary General Ban Ki Moon, Dr.
El Baradei, Nobel Peace Laureate and 800 delegates from 71
countries. Mauritius will now host the first Regional Arbitration
Centre of the Permanent Court of Arbitration, of the Hague, which
will be great news for investors;
in September last year, we passed a resolution at the UNCAC and
Mauritius is now the anti-corruption platform for all SIDS
countries; and
last month, at the Commonwealth Secretariat here in London,
Mauritius took a lead role to promote Good Governance in
African and Commonwealth Countries, after we have enacted a
great piece of legislation known as the Good Governance and
Integrity Reporting Act.
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And Ladies and Gentlemen as you are already aware, Mauritius is

Bilateral Investment
equally party to an extensive network of Bilateral
Treaties
Treaties, including IPPAs that allow risk mitigation and investment
protection
protection.
The risk mitigation possibilities offered to the international investor
community, coupled with our cost effectiveness and high level of
professionalism, makes Mauritius the preferred, tried and tested
jurisdiction for a number of strategic markets.

Ladies and Gentlemen, a lot have been said on the tax treaty between
India and Mauritius. We are the preferred Private Equity domicile for
India and many refer to us as being the Home of Private Equities for
the Indian market. The 2015 figures show that there were more than one
hundred Foreign Portfolio Investments and Foreign Institutional
Investors domiciled in Mauritius, investing in India. Many of these
investors have full-fledged offices providing mid to front line services
such as investment advisory, analytics, valuation and active management.
With regard to the revised India Mauritius Double Taxation
Avoidance Convention
Convention, again it is well known that investors have over
the last 32 years benefitted from the exemption to capital gains taxes on
their investments in India. However, due to changes on the international
front, whether in India or Europe, after 3 decades, inevitably the
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business model was called upon to be restructured. The international

community is moving towards more fiscal responsibility, and a
source-based approach for taxing returns rather than residencebased
based. The India-Mauritius tax treaty has therefore been accordingly
revised.
Grandfathering of existing investments, that is of shares acquired in
Indian companies before 1 April 2017, would be exempted from capital
gains taxes, irrespective of the alienation of such shares. Capital gains
taxes will only be imposed on investments from Mauritius that are made
from next April onwards. The tax rate will be half the prevailing Indian
rate for the first two years and will then be equalised by April 2019. And
shares acquired on or after 1 April 2017 but disposed of before 31 March
2019 would be subject to a reduced tax rate of 50% of the domestic rate
in India. After 31st March 2019, Mauritius will still be a preferred
jurisdiction for investors, because for all the numerous advantages that
we provide and from a tax point of view, we will NOT be at any
disadvantage compared to any other jurisdiction. The new policies that
we are now implementing in terms of our new vision will propel our
financial services and the new Mauritius International Centre (MIFC)
sector into a much higher dimension.

And I must say that with the revised treaty, Mauritius is as at date, the
only jurisdiction which can provide certainty to the international
investors. This has brought back the much awaited and needed level of
confidence and clarity in our jurisdiction from the international
investors community.

The revised DTAC also creates a new impetus to the role Mauritius will
play as an International Financial Centre, especially for debt
debt. Gains
from derivatives and other forms of securities like compulsorily
convertible

debentures

(CCDs)

and

optionally

convertible

debentures (OCDs) continue to be governed by the existing provisions.

This, coupled with the favourable tax rate of 7.5 percent on interest
introduced in the protocol for the revised Treaty would make Mauritius
the jurisdiction of choice for debt/derivate instruments in the coming
times as well.

Ladies and Gentlemen,

In line with the vision of the Government of Mauritius and our broader
Africa Strategy, the Mauritius International Financial Centre (MIFC) is
rapidly becoming the preferred centre of substance for Private Equity
investments in Africa.
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Confidence for Private Equity in Africa is certainly increasing. Track

records are deepening, growth is strong, risks are manageable and
Limited Partners (LPs) continue to rate the region highly amongst their
emerging market options.

Fundraising for Africa remains strong, represented by an increase of

24% in 2014, to over USD 4 bn. This rise came at a time where
investments decreased in developed markets, which shows that investors
continue to believe in Africas potential.

Ladies and Gentlemen,

Again, Mauritius remains a proven platform in this context. We are a
member of the African Union, Southern African Development
Community (SADC), and of the Common Market for Eastern and
Southern Africa (COMESA).

I am also pleased to announce that we have, only couple of months ago,

officially launched the Mauritius IFC in the presence of Lord
Mountevan Jeffrey Evans, the Lord Mayor of the City of London. We
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have equally signed an agreement with the City of London during that
same event for Mauritius and the City of London to promote financial
services, together.

So, on one hand, we are creating best practices for Good Governance
and transparency, and on the other hand, we are opening new
opportunities for our Financial Services sector.

We remain committed towards graduating the level of sophistication of

our International Financial Centre (IFC) towards bespoke products and
services, and encouraging more substance and effective management of
our international companies.

At the same time, I have personally ensured that no uncertainty looms

over the Mauritius IFC with respect to its role as the key financial centre
for Africa.

In this respect, last year, a memorandum of understanding

was signed by Mauritius and South Africa to bring into operation the
mechanism to determine the dual residency provisions of the MauritiusSouth Africa tax treaty
treaty. The revised treaty is in line with the draft Base
Erosion and Profit Shifting (BEPS) projects Action 6, which pertains to
treaty abuse. The revised treaty also provides new substantial presence
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requirements to avoid any potential dual residency overlapping, and a

reviewed mechanism for transparency and effective exchange of
information between Mauritius and South Africa.

I am also pleased to share with you that Mauritius was among the first
countries to sign an MOU with the European Securities Markets
Authority (ESMA) in line with the provisions of EUs Alternative
Investment Fund Managers Directive. The MOU reaffirms Mauritius
commitment to the highest standards and best practices and reinforces
the position of the Mauritius IFC as an attractive jurisdiction for
Alternative Investment Funds Management.

In the same vein, a new Licence is shortly being introduced to allow

International Law Firms to set up in Mauritius for global legal advisory
services. This will no doubt further boost confidence in our jurisdiction
and, I remain very optimistic that the presence of flagship law firms in
Mauritius will be a catalyst to cross border investors.

Ladies and Gentlemen,

A major challenge for investors looking at Africa remains the very
strong volatility linked with African currencies. Not only this gives rise
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to huge exposures, but in many cases act as a deterrent to investment.

To allow investors to better mitigate their risk exposures to African
FOREX volatility, we are working on introducing the regions first
derivative platform that will allow hedging of risk of African
currencies against the US Dollar, in Mauritius
Mauritius. This project is already
on track.

Ladies and gentlemen,

Another critical issue for Private Equities investing in Africa remains the
availability of effective exit routes.

Sub-Saharan Africa saw 40

disclosed PE exits, an increase of 38%, and an eight-year high for exits

in the region last year. Mauritius, as a tried and proven financial centre
with one of the most innovative capital markets and stock exchanges
in Africa provides an excellent exit choice
choice. We have also linked up the
Stock Exchange of Mauritius with the National Stock Exchange of
India (NSE) and the Johannesburg Stock Exchange (JSE).

Ladies and gentlemen,

And I am pleased to announce that we will shortly be introducing a
scheme to further enhance the presence of leading Private Equity

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funds and asset managers to operate and run mid and front line
activities from Mauritius.

In this respect, as the Minister responsible for Financial Services, I am

inviting you all to let us know what would be your requirements to
improve the ecosystem that we have in place Mauritius for Fund
Managers to set up, operate their funds and employ our young
professionals. The Financial Services Promotion Agency (FSPA)
operates under the aegis of my Ministry and is available to discuss with
you in this regard. I assure you that I will personally look and assess
all the requirements that you share with us, and will facilitate the
implementation process
process.

My message, is for you to look at Mauritius as an innovative and

modern International Financial Centre of substance, which offers a
proven platform of choice and repute to Private Equity funds. I am
confident that with its many benefits as an IFC, Mauritius remains
THE ideal jurisdiction partner for your Private Equity needs in
Africa
Africa. I am also pleased to announce that in October this year, we will
be hosting the Finance Africa Conference, which will offer a platform
for African projects in need of financing to link up with potential
investors.
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With these words, Ladies and gentlemen, I now have the pleasure to
declare the 5th annual Private Equity Africas LP-GP Summit open and
wish you all fruitful deliberations.
I thank you all for your attention.

Roshi Bhadain GCSK.

London, 9th June 2016.

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