Conduits of Capital

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STAKEHOLDER VIEWS ON MAURITUS:
“When it comes to investing in Africa, it would be highly unusual for us to make an investment directly from a fund. You would
invariably engage in some transaction analysis, primarily driven by tax, which means that you will have one or more intermediate
vehicles through which you will invest. That may be because of the particular requirements of the sponsor or the type of
investment that you’re making. It may be that you are bringing in a management team that is taking some kind of participation
and their requirements dictate a certain structure; or, there may be a double-tax treaty you are trying to take advantage of.”
– Pan-Emerging Market GP
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“We invest across Sub-Saharan Africa, so no single specific local domicile would be efficient for the portfolio, the LPs or the
GP. Furthermore, no Sub-Saharan African jurisdiction at present offers equal or better efficiencies than Mauritius.”
– Sub-Saharan African GP
SPOTLIGHT: THE IMPORT OF FUND
DOMICILES IN FUNDRAISING AND
ALLOCATION DECISIONS
Although the majority (64%) of survey respondents
view fund domiciles as important or very important
in their—or their clients’—fundraising and
allocation decisions, these aggregate figures mask
some notable nuances by firm type, respondent
location, and experience with Sub-Saharan African
private equity.
Perspectives by LP Segment: While 50% of
LPs indicate that the location of a fund domicile
was either important or very important to a fund
commitment decision, nearly 75% of GPs report
this to be the case. One possible reason for this
discrepancy between LP and GP perceptions
could be that GPs think more closely about how
tax impacts net returns to LPs. Another possible
explanation could be a function of the fact that
a number of Sub-Saharan Africa-focussed GPs
rely heavily on development finance institutions
(DFIs) as investors in their funds. Of note, 58%
of DFI respondents reported that domiciles were
important or very important compared to only 25%
of public pension funds.
Perspectives by Geographic Segment: More respondents from Sub-Saharan Africa, Canada and
the UK deem the location of a domicile as important or very important to their fundraising / allocation
decisions than those from Asia-Pacific economies.
Perspectives by Level of PE Experience: Experienced LPs—defined as those with more than
six Sub-Saharan Africa-focussed funds in their portfolio—give more weight to the importance of
the location of a fund’s domicile than inexperienced LPs; 63% of experienced LPs report that the
location of a domicile is either important or very important compared to 38% of inexperienced LPs.
In contrast, regardless of their level of experience, GPs are more likely to say the location of a
domicile is either important or very important in their decision to raise a fund.
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