Ronny Lam explains how the coming of SANNE within the local landscape should help raise the ante and encourage existing operators to get out of their comfort zone and innovate.

As Transaction Adviser, you engineered the deal leading to the acquisition of International Financial Services (IFS), the leading local offshore management company, by London listed company SANNE. How did it all start?

Late last year, a colleague and I were in the office discussing how we could play a part in the consolidation of the offshore management sector in Mauritius. We quickly focused on the idea of identifying an acquirer for IFS, the largest and one of the best operators in the industry. We brainstormed about the type of buyer that could be attracted to Mauritius and to a company with the characteristics of IFS and a few days later, we were going through a shortlist of names on the Internet. I was pleasantly surprised to see that a former senior colleague at HSBC Investment Bank 12 years earlier is SANNE’s current Chairman. The rest is history.

What challenges did you face on this transaction?

The first challenge was to establish our credibility in the eyes of SANNE and win the advisory mandate. Generally with sophisticated clients, you only have one chance to impress and it is much more difficult when you have never met the Chief Executive Officer and need to do this on the phone. It is all about demonstrating that you have done your homework, displaying your transaction experience and picking the right words, in short convincing the client that you are the right person for the job.

The second challenge was to persuade the owners to engage with SANNE. I had come across the owners of IFS on one or two occasions at business functions but did not really know them. Their key concern was how we would preserve confidentiality in order not to destabilise the business. We went to great lengths to ensure that the risk of a leak was minimised. For example, SANNE did not appoint local advisers until 5-6 weeks before signing.

Were there moments when you thought that the transaction was going to fail?

Of course, as is the case in all M&A (Merger & Acquisition) transactions. One of those moments was the announcement in May 2016 that the Mauritius/India tax treaty had been re-negotiated and the dramatic predictions that it was the beginning of the end for the local offshore management sector. I remember taking a call from SANNE’s Chief Finance Officer, who had read a rather negative article in the Mauritian press. I must have done a decent job at convincing him to proceed with his due diligence trip.

Other moments related to tricky transaction issues and negotiation points, which required some creative thinking to come up with practical solutions and the confidence to advise our client accordingly. These are the moments when a M&A adviser earns his fees.

How would you assess the implications of this transaction for the offshore management sector in Mauritius?

I think that it is a strong vote of confidence in the Mauritian offshore management sector. SANNE is one of the most sophisticated and fast-growing operators in the industry, having made several acquisitions globally, the last one in the USA. The fact that they made such a significant commitment, representing approximately 18% of their preacquisition market capitalisation to Mauritius, attests to their belief in the positioning of the island as the gateway to Africa and India and in the future of the local offshore management sector.

SANNE offers a very wide range of products and will bring expertise that does not currently exist here. This will help strengthen the industry’s product offering and ultimately attract more foreign companies to Mauritius.

The arrival of SANNE should help raise the ante and encourage existing operators to get out of their comfort zone and innovate. Com- petition is likely to intensify and the process of consolidation within the local sector should accelerate.

What does this transaction represent for MCB Capital Markets?

I believe that this transaction is a first on a couple of fronts. It is probably the largest Mauritius inbound M&A transaction ever executed. It is certainly the first time that a Mauritian investment bank orchestrates and acts as Transaction Adviser to a large UK-listed company on a major strategic cross-border acquisition.

For me, this transaction is a milestone in demonstrating to our existing and potential clients what our team is capable of. Winning the trust of a sophisticated acquirer such as SANNE is an exceptional achievement for a nascent investment bank. I hope that it will help set MCB Capital Markets apart from other banks, audit firms, wealth managers, OMCs who are all trying to provide corporate finance advisory services.

You have been leading MCB Capital Markets for almost three years. How is it going?

 Generally well. We have made good progress in the local market, having advised on most bond issuances to date and are gradually turning our attention to Africa. A few weeks ago, we completed the largest bond issue in Mauritius to date, a MUR 5 billion (US$140m) private debt placement for Sun Limited. With some luck, we will close a couple of transactions on the continent next year, which will give us the impetus to do more.

Two or three years ago, clients did not know that we existed and what our business was about. Now, most local companies of a certain size have at least heard of us. We need to get better at explaining what we do and how we add value. Pieces of business that should naturally come our way are still going to audit firms and other types of organisations. Old habits and relationships die hard.

What will be your main objective at MCB Capital Markets?

My ambition is to build the premier offshore investment banking franchise for Africa. We have a strong platform on which to build. Our success will be determined by the quality of our team and by how well we execute our strategy.

Finally, what makes a good M&A adviser?

Passion for the job, which translates into hard work, hard work and hard work. Unfortunately, nothing can replace on-the-job training, the long hours in the office and transaction experience accumulated over many years of excruciatingly hard work. There are certain professions that technology simply cannot re- place – transaction advisory is one of them. Good transaction advisers are paranoid about their deals. They go to bed late and wake up early, thinking about the next deal or about solutions to the issues on the transactions they are handling. It is a tough way to earn a living, which is why it is not a career for everyone.