Crowdlending comes of age in Mauritius: SME Equity Fund collaborates with Fundkiss
20 Oct 2020
We are excited to announce that the SME Equity Fund has officially become our first institutional investor with a view to promote crowdlending in Mauritius and take SMEs in the island economy to new heights of success, against the backdrop of access to finance being a key area where local entrepreneurs could be expected to benefit from the full might of a public-private partnership
With the much-anticipated Peer-to-Peer Lending Rules that the Financial Services Commission (FSC) brought into effect from 15 August 2020, we can already see other signs that crowdlending is coming of age in Mauritius – not least among which was the signing ceremony on this Thursday, 20 August 2020, to cement the collaboration between the SME Equity Fund and Fundkiss.
It was an unforgettable moment for the SME financing ecosystem when the SME Equity Fund’s Chairperson, Dominic Provençal and our co-founder and CEO, Paul Perrier, inked an agreement to seal this noteworthy partnership at the Caudan Arts Centre in the Port Louis Caudan Waterfront area, in the presence of a large audience made up of FinTech players, financial institutions, regulatory authorities and media members.
We were proud to host dignitaries such as Mardayah Kona Yerukunondu, FSC Chairman and First Deputy Governor of the Bank of Mauritius, as well as Michal Szymanski, CEO, Mauritius Africa FinTech Hub (MAFH), Mauritius’ leading FinTech association that serves to promote the cause of local FinTech in a pan-African context and counts us as one of its core members.
Celebrating this noteworthy collaboration between key players in SME finance
Inaugurating the event, Paul Perrier underscored the importance of this collaboration, noting that, in his eyes, this partnership symbolises “the perfect example of cooperation between different players in the financial ecosystem” with a view to boosting SME access to finance. Against the backdrop of a post-COVID world, he noted that this collaboration makes even more sense in the current extenuating circumstances.
He went on to laud the SME Equity Fund Ltd as “a well reputed and discerning institutional investor that is joining the Fundkiss community” and leading the way for “other institutional investors to join us to invest in the real economy in promising projects led by passionate Mauritian entrepreneurs.”
For his part, Dominic Provençal, Chairman of the Board of Directors of the SME Equity Fund Ltd, remarked that this partnership with Fundkiss, “which has always been at the forefront of innovation and was the first online crowdlending platform to connect investors and entrepreneurs in Mauritius”, would serve to “expand the financing options for SMEs in the market.”
Against the overarching objective of the SME Equity Fund which he noted was “passionately committed to supporting SMEs” and was “always in search of innovative ways to help entrepreneurs”, he emphasised that “the alternative financing mechanism of crowdlending would ensure that the collaboration between our institutions can only be of the utmost benefit for local entrepreneurs.”
Mardayah Kona Yerukunondu not only attended the event as our guest of honour but also delivered a heart-felt speech that underscored the importance of crowdlending as a democratic and novel mechanism of financing the vital SME sector, going so far as to call our partnership with the SME Equity Fund a ‘game changer”.
He also lauded Fundkiss as “among the first to have obtained a licence under the National Regulatory Sandbox Licence (RSL) regime” and momentously announced that we would soon “transition to a more permanent licence under the FSC” while noting that our partner, the SME Equity Fund, “already holds a CIS license under the FSC.”
Using our synergies to take the SME sector in Mauritius to the next level
Joining hands with the SME Equity Fund marks the start of a public-private partnership that is expected to take the local entrepreneurial ecosystem to the next level. We are looking at the SME Equity Fund investing up to 10% on projects posted on the Fundkiss platform, up to a maximum of Rs 100,000 per project.
To give a brief backdrop, our co-founder and CEO Paul Perrier had previously drawn attention to a Budget 2020-21 announcement which noted that ‘the SME Equity Fund Ltd will invest through the crowd lending mechanism to the tune of up to Rs 200,000 per project’.
There are clear synergies between the SME Equity Fund and our own platform at Fundkiss since the former extends long-term equity financing while we deal in debt finance of a shorter duration, thus allowing our two organisations to cover the complete lifecycle of a small or medium businesses’ financing needs between them.
With this collaboration bringing to the table two dynamic entities which extend alternative financing options to SMEs, we believe that this partnership serves to sow the seeds of new and unparalleled growth for the SME sector in Mauritius.
Why this public-private crowdlending partnership is so significant for Mauritius
To elaborate on what Fundkiss has achieved so far, our platform supports a diverse range of projects, from micro-enterprises to SMEs, with loan sizes ranging from Rs 50,000 to Rs 10 million. To date, Fundkiss has financed more than 70 projects for funding of over Rs 31 million bringing together a community of 1,750 investors in the process, of whom at least 276 are active lenders, in that they have invested at least once in the last 12 months.
In just a brief span of time from being issued an approval under the RSL regime of the Economic Development Board in 2017, we have quickly become a trusted player in the Mauritian entrepreneurial ecosystem and democratised the financing of local SMEs by connecting borrowers (sole proprietors or companies) in search of financing, to lenders (individual or institutional investors) seeking to diversify their investments and support the real economy.
Coming to the SME Equity Fund, it was set up in 2006 with the aim of taking SMEs to new heights by supporting them through equity financing. The SME Equity Fund is recognised by the FSC, under the aegis of a Collective Investment Scheme (CIS) license. Going far beyond the traditional financing extended through banking institutions, the SME Equity Fund Ltd has carved a welcome niche in the local investment ecosystem by providing financial support to more than 150 companies for an amount exceeding Rs 550 million.
We are excited to announce that this collaboration is already having the desired effect of expanding SME access to finance as illustrated by the SME Equity Fund having invested in around ten projects run on our platform.
An exciting future beckons
With the FSC rolling out the Peer-to-Peer Lending rules earlier this month, Fundkiss can confidently look forward to coming on board with its partner, the SME Equity Fund, under the overarching aegis of the requisite FSC framework.
In this light, we can clearly foresee an exciting future for SMEs in Mauritius with a plethora of financing options at their beck and call. As Zayd Soobedar, the Managing Director of our credit consulting partner, Strategic Insight Ltd, so aptly says, “This partnership is one small step for Fundkiss, but one giant leap for Mauritian SMEs.”
Indeed, with our five-pronged promise of rapidity, fluidity, transparency, simplicity, and personalisation, we expect Fundkiss to lie at the heart of the SME financing ecosystem in Mauritius as we go on to solicit more such institutional investors as the SME Equity Fund to bring their financial prowess to the support of the local SME sector.
To echo the words that Mardayah Kona Yerukunondu so momentously uttered at the event, “Long live crowdlending!” – and long live the entrepreneurial spirit that is poised to take our economy to new heights in a post-COVID world.