Ocorian CEO Stuart Layzell talks to Business Magazine Mauritius18 Feb 2019
Following the acquisition of African and Middle East business services provider Abax Corporate Services (ABAX) in April 2018, we launched a new package of services tailored specifically for those wishing to invest and operate into or out of the burgeoning AMEA region.
What was the idea behind the acquisition of ABAX by Ocorian? Was it a choice leveraged on the structure of the firm or the advantages the jurisdiction offers?
It's mainly around the jurisdiction. Clearly, there are many advantages around the jurisdiction and ABAX as a business. We've been in Mauritius for quite a while now; so we've grown to nearly fifty people. It was a logical addition to invest further in the jurisdiction.
What was the amount of investment?
That is confidential, I am afraid. We are a private company; so we don't share that sort of financial information. It is one of the largest transactions in the jurisdiction however.
The acquisition of Abax in Mauritius by the Ocorian group was its second one in less than two weeks. How do you explain this momentum?
We actually look at things over a certain period of time. We have acquired four businesses in the last twelve months; so the actual completion for transactions may take place in a very narrow period but the business planning and strategy occur over a longer period. The ABAX transaction was part of a wider picture of what we had been deploying in the last twelve to eighteen months since our management buyout in 2016.
Coming to Ocorian as a group, Jersey-based businesses have faced a lot of criticism over time about the transparency of their transactions and funds. How would you respond to this?
The best way to look at it is, I think, Jersey is one of the most respected and transparent Jurisdictions in the world. I think it leads the world in that regard. So, the criticism is a lot less than other jurisdictions. It is a trusted and reliable place for international companies to do business.
What can you tell us about the changing patterns in investment choices made by investors over the years, jurisdiction and portfolio-wise?
Concerning jurisdictions, it really depends on the objective that they are trying to achieve as an investor. If they are looking to invest in a particular region, Africa for example, then Mauritius would be a very logical choice for them to make because of the stability and professionalism that is available in the jurisdiction here. It is an excellent hub. That will be a typical reason why investors would make a choice: it depends on the end target and objective for their investment. With the portfolio, it really depends on the mandate of the fund.
What do your clients look for in terms of risk factor?
They look for stability, professionalism, availability of resources and skills and the quality of service when they are considering a jurisdiction. If it does not have all the capabilities to service their needs, then irrespective of other attractive features, it is unlikely that they will choose that option. If you are an investor sitting here in an office in Ebene, what you would see is an excellent representation of the big-four accounting firms, excellent representation of international law firms, and a good representation of service providers, like ourselves. So, there is the ecosystem that you need as an investor. Whereas if you go to other places, you might not have that full-service capability and that would be a reason why people are making a decision towards particular jurisdictions. It's the same thing for an investor targeting Europe; Dublin is an ideal choice because of the proximity.
What are the projects in the pipeline for the region?
For us as a business, there are a few things in the pipe-line.
We want to continue the investment, supporting clients who are either in Africa already or would like to have more exposure to Africa. One of the other things that we are doing is making sure that we share the knowledge from within the Ocorian group into other jurisdictions to make it accessible for our staff and colleagues here, because that is an important part of their professional development and our capabilities together. For example, we have the opportunity for our staff mobility into other jurisdictions. That gives them a chance to learn to develop their skills in a different environment and bring those back to the team here.
Some of your offices are located in jurisdictions considered as Mauritius' rivals when it comes to global business and investment. What are the projects to make the Mauritian offering stand out from the lot?
From a service provider point of view, I would have a slightly different angle on the competition because each jurisdiction in isolation does see others as competitors. When we look at the needs of our clients, who want to have the right solution whatever the jurisdiction is, as a business we have to provide these capabilities on a much wider scale. So, we don't look at each jurisdiction in isolation. If our clients want a portfolio of jurisdictions, then we need to be able to provide that. As part of that, going forward what you will see is perhaps less competition between jurisdictions because they will start to operate with more consistency and transparency as they each get to a more consistent level of international standards of operations and probably cooperate more rather than be in competition.
If you had investors considering investment in India, would it be via Mauritius or Singapore, where you are also present, given that India is kind of a battlefield for both countries when it comes to routing investment?
Ocorian would be neutral in that battle. We would look at the specific objectives of the client and it might be that at the margins, it could be something like a time-zone difference. So, if the investor was coming out of the UK, they might find the time zone here more appropriate. These are small differences but make it more accessible than Singapore. We want to make sure that we can look at the circumstances and look at the needs of the client to have a clearer answer into which jurisdiction is more appropriate.
A lot has been said about low taxation being the backbone of the choice international firms like yours make for Mauritius as a hub, if we dare say. Would you agree?
Historically, if you look at the last ten to fifteen years, tax has traditionally been a driver. You cannot ignore that. However, now that tax is too simple or too narrow a consideration, we think that clients are looking for a much wider range of services and capabilities out of the jurisdiction.
So, tax isn't the only driver and often not the primary driver either. The decisions taken will be driven around the ecosystem and the quality of service. There was a jurisdiction that just had fantastic tax advantages but no professional community, and it was difficult to get to them. That would actually become a barrier as to why a client would use that jurisdiction. In the past, tax was the driver and what we now see is that it is more of a consideration from a longer list of things.
While firms like SGG and Ocorian are making buyouts in Mauritius, we have noticed that certain banks like Deutsche Bank and Barclays are reviewing their presence in the jurisdiction. Why are the banks running away?
That is a very good question. We first need to look at the distinction about the banks and the financial institutions. The most important thing to look at is that it is not something negative about the jurisdiction. The banks are shedding lines of service or areas associated with their balance sheet as part of a global decision. It is perhaps just a coincidence that it is in Mauritius, but they are not taking a view that is negative towards Mauritius or any jurisdiction. Their change of strategy will have impacted multiple jurisdictions. I don't see that as being a statement about Mauritius from the banks.
How has Ocorian geared up for the international laws coming into play, requiring more certainty and transparency, namely, from the OECD and other such organisations?
Many of the things you referred to are being rolled out into many jurisdictions across the globe. We operate in places like Jersey, which have been early adopters for bringing in these rules. So, we have the benefit of having experienced substance changes in Luxembourg and Jersey, like the CRS and FATCA. The transparency elements were there already in our business and so we can bring this to our operations here. We have an established methodology when it comes to helping our clients comply with the new regulations.
Did the implementation of these new rules have a significant impact on your balance sheet?
We see them as positive for two reasons. First of all, it is an additional service our clients would look to us to provide, and it is an opportunity. Also, these rules bring confidence from the wider international business community in that particular jurisdiction because if it is perceived to be transparent and compliant; then that supports confidence. We see it as an opportunity for us, the business and the jurisdiction.
The recent forum organised by Ocorian Mauritius aimed to brainstorm on added value for businesses in Africa. What is Mauritius' capacity in providing the same to the African continent?
I think Mauritius is uniquely placed as a hub because when you think about what it represents in the context; it has advantages around stability. When you are an investor, uncertainty is a challenge, as we are experiencing in the UK at the moment - with Brexit. The more certainty you can provide, the better. What Mauritius represents is a hub that is stable with a sophisticated legal system and financial services sector and a sensible governmental structure. Those things are essential foundations to then bring that experience to other parts of the continent. I think that's part of the role Mauritius has to play as an accessible location and this is what we are trying to do with the forum: bring different stakeholders that have an interest in the continent together in Mauritius to exchange ideas and how we can look to the future to make sure Mauritius has an important role to play on the continent.
What are your objectives in terms of figures for Mauritius and Africa?
One way of answering this is the fact that we are acquiring more space into our building to accommodate another 120 people. Hopefully that gives you a sense of the ambition since we are investing for them aside from the existent 300 people.
Are there any other hubs you are targeting in Africa aside from Mauritius?
We already have people based in Ivory Coast and South Africa. We are in the process of finalising the recruitment of people in Nigeria and Kenya. We want to make sure that we have people in the right parts of the continent to support our ambitions for the Mauritian Jurisdiction. The main focus is to make sure we expand our capabilities in Africa and match that with our expanded capabilities here.
Words: Himanshu Marchurchand