Kevin Teeroovengadum (Director of Actis) – “Mauritius can be a fiscal platform for global investors in Africa”

BUSINESSMAG. Actis is active in Africa as a private equity firm. Tell us more about your involvement in the region?

Actis was established in 2004 after spinning out from the Commonwealth Development Corporation (CDC), the UK’s development arm, founded in 1948 to invest in the Commonwealth countries. A number of the Actis management and investment teams had worked at CDC and brought years of experience in investing across Africa, Asia and Latin America.

Today, we are recognised as one of the most active private equity firm, managing around US$5 billion from approximately 130 investors globally and with investment focus in emerging markets such as Africa, India, China and Brazil. We have invested US$4.0bn in the emerging markets and realised US$2.2bn from US$867m cash invested since the establishment of Actis. We invest in response to two trends in emerging markets: firstly, the rising domestic consumption, driven by the rapid expansion of the new consumer class, and secondly the need for sustained investment in infrastructure.

Our head office is based in London and we have offices in key markets such as Sao Paolo, Nigeria, Johannesburg, Nairobi, Cairo, Mumbai, Singapore and Beijing.

“I am delighted to see more and more Mauritians now looking seriously at Africa. We are seeing names such as Omnicane, Alteo and IBL that have fantastic experience in sugar, energy generation and commercial activities”

BUSINESSMAG. What are the main projects that Actis is presently financing in Mauritius and Africa in the real estate sector?

In Mauritius, we have set up a property development company in January 2009 in joint venture with Group Mon Loisir (GML). The company is called Indian Ocean Real Estate Company Ltd (IOREC) and started with selected land bank from GML and it has been a great adventure till now. Together with GML, we built the management team from scratch, and brought in global expertise in the company at the management and board level mixed with local expertise.

We have developed Riverside Shopping Centre in the village of Rivière-du-Rempart. The place which was formerly a tiny village is now known as a shopping destination for people living in the nearby regions. We have another three projects nearing completion in the next five months. These include Phase I of Les Hauts Champs residential development, phase I of Circle Square Retail Park and the Centara Poste La Fayette Hotel. The most exciting project within the IOREC portfolio is Azuri, which is the development of a sea-resort town at Haute-Rive. Phase I of Azuri is under construction and we look to complete the development by the end of 2013.

As for Africa, we are one of the most active real estate investors and developers in key markets such as Kenya, Tanzania, Ghana and Nigeria. For instance, we developed the first and second shopping malls in Lagos, with the 2nd one which just opened in December 2011.

We also developed the first shopping mall in Accra which we sold three months ago. This demonstrated that there are investors who are keen to acquire prime properties in Africa. We have a dedicated real estate fund, and an investment team specialised in real estate development. We are currently working on a number of projects such as One Airport Square which is an office development close to the Accra International Airport in Ghana. In addition, we have acquired a big plot of land in Nairobi and we are looking at a mixed use development underpinned by a big shopping centre. In Zambia, we have acquired a controlling stake in a land near the Lusaka International Airport for the development of  a shopping centre and a business 3-star hotel. In Nigeria, we are looking at office and shopping centre developments.

BUSINESSMAG. What is your broad vision of Africa and its growth?

Africa couldn’t be in a better place and has a fantastic decade ahead of it. When looking at the continent, one can notice that there are a number of countries which have reached political and economic stability and that are currently on an amazing growth path.

Seven African countries are amongst the 10 fastest growing countries in the world. Foreign direct investment (FDI) to Sub-Saharan Africa (SSA) recovered to a record high in 2011. It rebounded to $35.0bn (2.9% of GDP) in 2011, from $27.4bn (2.7% of GDP) in 2010, and in doing so exceeding the previous high of $34.7bn (3.7% of GDP) in 2008.

Zambia for example, has had FDI exceeding 10% of GDP in 2010 and 2011. Eastern and Southern Africa’s natural gas reserves, especially the offshore fields of Mozambique and Tanzania, could significantly boost the region’s FDI inflows. In 2011, Mozambique’s FDI inflows doubled to $2.1bn. New discoveries are still being made. The development of gas fields and the liquefied natural gas (LNG) industry will require substantial upfront investments, of which FDI will likely play a significant role.

Eni’s (an Italian company), which plans to invest $50bn (likely between 2013 and 2018-2020 in our view) to develop the gas fields recently discovered in Mozambique, is one such example. A lot of the FDI is predominantly in the oil/gas extraction, copper, nickel, lead and zinc mining. Africa is a rich continent. However, development in these sectors also leads to opportunities in support services sector. For example, there is a plan to develop the biggest logistic park in Tete (Mozambique) to support the growth of mining companies.

BUSINESSMAG. What role can Mauritius play as a gateway to Africa as regards the Global Business?

First of all, let me talk about the Mauritian offshore sector. Mauritius is well positioned to be a fiscal efficient platform for global investors who want to invest in Africa. However, with global offshore jurisdictions being in the spotlight during the last couple of years, it is important that Mauritius ensures that the right substance is added in the country. For this, we need to make sure that we can provide further incentives for international investors investing in Africa to be based full-time in Mauritius, that is, have proper offices on the ground of Mauritius where decision-making is done for these investments made in Africa.

Also, it is important to make Mauritius a good living experience for expatriates, by allowing them to settle in the island, acquire properties and send their kids to good schools. We also need to improve our flight connectivity to the continent. For now, there are only daily flights to Johannesburg and I think two flights per week to Nairobi. That’s not enough. It is essential that Mauritius re-invents itself continuously as the global market – including Africa – is becoming more dynamic and efficient.

Let me give you an example. Over the last three months, Emirates, KLM and Turkish Airlines are flying to Lusaka (Zambia) and using Lusaka as a mini-airport hub, picking up passengers from Zimbabwe and Malawi. Hence, people from Zambia, Zimbabwe and Malawi don’t need to fly to Johannesburg anymore to fly across the world.

Secondly, let me talk about Mauritian investors and conglomerates going into Africa. I am delighted to see more and more Mauritians now looking seriously at Africa. We are seeing names such as Omnicane, Alteo and IBL that have fantastic experience in sugar, energy generation and commercial activities. We can also notice banks such as Afrasia Bank, which are expanding themselves in Southern Africa. I would say there are more than these sectors for Mauritians to invest. For example, there is a fantastic growth in property and infrastructure development in Africa. We have major contracting companies that could do well in key markets, maybe smaller markets that are not crowded by big South African or Chinese contractors. Most of the hotels in Mauritius have been built by Mauritian contractors.

So this is an expertise that could be offered to hotel developments in Africa. There are two big listed construction material groups in Mauritius that have conquered the local market and I ask myself how much can they grow in Mauritius. They should be considering Africa more seriously.