While 2021 will most probably be a difficult year for the economy and most businesses, financing to sustain this difficult period has been a priority for many businesses. The news that the Stock Exchange of Mauritius announced that it will soon launch the Venture Market, as announced in the first budget speech of the Minister of Finance, Renganaden Padayachy, provided relief to a number of entrepreneurs who so far cannot raise capital on the main market and the Development Enterprise Market (DEM).  The news provided much optimism as in the SEM latest annual report, it was announced that the new market will be launched imminently.

While the SEM lost close to 20% in 2020, local IPO activity is not picking up. The launch of the Venture Market, entrepreneurs say, come at an opportune time. Globally it has been the highest IPO capital raising activity in a decade, with USD 331 billion raised across 1,591 listings – a 42% increase compared to 2019, according to Baker McKenzie. After a global slowdown in Q1 and Q2 due to the pandemic, a strong boost in IPO activity in Q3 saw the volume of listings more than double as compared with Q2 2020. Of this, 76% of capital raised came from domestic IPOs, which also account for approximately 86% of listing volumes for 2020, due in large part to a surge in US and China domestic listings.

Across all IPOs, Financials grew by 37% in volume compared to 2019, raising USD 108 billion in 2020, across 360 listings. Financials also top both domestic and cross-border IPOs as the top industry according to the amount of capital raised. Technology companies raised USD 55 billion in 2020 across 257 listings, due to increased activity in Asia Pacific, which saw a 13% increase in 2020 compared to 2019.

COVID-19 has shaped VC investment activity in 2020 and the emergence of start-ups and promising ideas through local incubators such as VERDE Ventures and La Turbine has been seen as promising for the country. Outside of IPOs, global venture capital investment has grown significantly. As of Q3 of 2020, VC investment across North America, Asia, and Europe reached USD 72 billion, a historic high. Locally, many deals have been closed and those include re-financing by loans or equity, mergers and also few acquisitions, and restructuring.

The deepening of the start-up community and business networking platforms which regroup angel investors and individuals with spare investment capital have also been touted as bringing optimism in the industry. Those will bring synergies and extensions to the proposed Venture Market as key to bringing along a new wave of innovation and pioneering ideas into the market. However, the longer the launch takes, the more difficult it becomes for businesses, as it is already a year since the COVID-19 pandemic started, and the launch becomes even more anticipated. Interest rates in traditional fixed income and savings rates are near zero could provide investors with new opportunities to obtain returns, while spikes in unemployment from COVID 19 could be cushioned with the emergence of local entrepreneurship. With start-ups finding it difficult to have access to capital because banks are credit squeezing, the ‘think local’ theme is the more important.

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