The SEM is currently working on the release of the SEM Venture Market. Many emerging businesses which are unlisted and so far not of the size to go public, have rejoiced at the news that the new exchange may be up and running by the end of this year or very early in 2021. Many start up founders we spoke to also mentioned that this could be a major opportunity for their businesses, as there are no Venture Capitalist investors in Mauritius. “The start- up ecosystem is currently buoyant but the capital raising and financing support to those entrepreneurs is quite complex. Only those who have access to high-net-worth-individuals manage to finance start ups which have innovative ideas. The launch of this new market comes at an opportune time. Nonetheless, we will need to understand the listing conditions and associated costs to be able to fully appreciate the merits of the new market”, says Dirish Noonaram, Co-founder and Partner at VERDE.
The SEM Venture Market aims at acting as a feeder market for SEM’s regulated listed markets namely: the Development & Enterprise Market (DEM) and Official Market, as we noted from the last annual report of the SEM. Shareholders of unlisted companies will benefit from the facilities of an organised market to trade their securities in a transparent manner with price discovery. This platform will offer the shareholders of unlisted companies the added advantage of trading their securities through a centralised order book and provide them with added visibility of the market value of their shares.
From reliable sources, we understand that the necessary approval from the Ministry of Finance (MoF) for the amendment of the Registration Duty Act to exempt transfers of securities on this market from payment of registration duty has been obtained. Assuming that the Venture market model and underlying operational rules proposed obtain all necessary approvals, we understand that the new market will be fully operational by December 2020 or early 2021. The SEM has already defined the operational model for the Venture Market and is, currently, in the process of drafting the rules governing this market as well as all final regulatory amendments required for its implementation.
Dirish Noonaram, further adds that “All start-ups and innovation-linked business are seeking capital. As an established jurisdiction, Mauritius could launch a series of measures to promote entrepreneurship, while attracting African start-ups, scale-ups and innovative businesses to use the new capital raising platform. New policies and framework to develop into an innovative and emerging start up hub for the region will quite interesting, especially for the international community. In 2019, it is estimated that $1.4bn was invested in African start-ups, from $ 740m in 2018. The top 5 countries for start-up financing were: Nigeria with 49% of total investment, Kenya with 32%, Egypt with 5.9%, South Africa with 5% and Ghana with 3.4%. Attracting African start ups into an innovative exchange could re-direct start-up capital to Mauritius and drive a new wave of innovation from Mauritius. The timing of such a market could also provide interesting post COVID-19, where many businesses are looking for: – New capital investments – Restructuring possibilities – Acquisitions (even in this segment may be a completely new space), and Start-ups with new ideas could be seeking capital.”
Start-up founders however are looking to obtain further clarity on how they could benefit from the Venture Market. In a recent discussion forum organized by VERDE, entrepreneurs voiced out concerns on associated costs such as for the listing, for ongoing compliance or even for sponsor/ adviser fees, which could be deter any consideration to use the Venture Market. Concurrently, with the evolution of the market landscape and the requirements of financing, a number of businesses will seek to use the opportunities which the new market will bring.
Ukeme Jonah, Co-Founder of Vite and an incubatee at VERDE has been funded by Oui Capital, a Venture Capital Fund based in the United States and by other private investors. Ukeme is physically based in Ghana but is operating his start-up out of Mauritius. ” What’s really amazing about SEM Venture Market is its innovative approach to helping startups raise funding. Many developed countries have gotten very creative and intentional about designing channels to help businesses and startups raise capital. Denmark for example has Nadaq Copenhagen- a very popular and successful stock exchange marketplace for capital raising, acquisitions and mergers. Through this exchange, thousands of startups have raised funding, scaled and gotten acquired. And that positioned Denmark as an innovative startup hub in the Nordic region. The launch of the SEM Venture Market couldn’t have come at a better time. Besides helping cash generative startups and businesses raise funding, this marketplace will position Mauritius as one of the leading startup hubs in the world. It goes without saying the SEM Venture Market will turn out as one of the best things that has happened to Mauritius and Africa’s fast growing startup ecosystem.”
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