Case study – GMEX Group investment in Mauritius

GMEX Group Limited – Global Markets Exchange Group (GMEX) is a London based provider of multi-asset exchange and post-trade technology and business solutions. It has a history of successful exchange support and establishment, and is able to provide a complete range of necessary exchange trading, clearing, settlement, electronic warehouse receipts, hybrid centralised and Blockchain based distributed ledger technology through its wholly owned subsidiary GMEX Technologies Limited.

Through its Market Advancement Programme (MAP), in addition to providing services to exchanges in the UK and the USA, GMEX also provides services to exchanges, clearing houses and central securities depositories across developing economies – for example an agricultural commodity exchange in Malawi, as well as exchanges in Uganda, India, Vietnam and Tajikistan. GMEX generates 95% of its income from overseas, all of this coming from markets outside of the EU.

In 2016 the Government of Mauritius promoted the Mauritius International Derivatives and Commodities Exchange (MINDEX) project, envisaged to become a multi-commodity and derivatives exchange platform. The project would establish a modern precious metal refinery, a spot and derivatives exchange, secure vault storage, and a clearing house.

GMEX saw this as a good opportunity to invest; it was an opportunity to create an aggregation centre for all of sub-Saharan Africa and Mauritius provided a good local talent pool and business climate.

British High Commission Mauritius and DIT Mauritius within it engaged with the GMEX at the start of the investment journey and actively supported GMEX by giving them high-level visibility within the Mauritian Government. Activities included:

  • inviting the CEO of GMEX to be a guest speaker at the UK-Mauritius FinTech conference in January 2017;
  • introducing and facilitating meetings for GMEX with key stakeholders, including the Financial Services Promotion Agency and the Mauritius Board of Investment (now part of the Economic Development Board) as well as key Ministers;
  • providing government-government contacts in other jurisdictions where GMEX was active, across multiple sectors and government departments, to further enhance their reputation in Mauritius.

In 2017, MINDEX Holdings Ltd was formed and GMEX became the lead member of the initial consortium to invest in the project. GMEX consortium led total investment in this project amounts to $35million, which over the next three years is expected to create 104 direct jobs over 3 years and an additional 408 new secondary jobs over the next 2 years in Mauritius. Based on GMEX analysis, the real GDP growth of Mauritius will increase to 4.1% instead of the estimated 3.9%, while GDP per capita will increase to MUR 0.388M as compared to MUR 0.387M estimated by MCB Focus. The total effect on the GDP over a 3 year period will amount to USD 53M (MUR 1,850M). The investment is expected to sustain 20 direct jobs in the UK and lead to the creation of 20 more jobs over the next 2 years. Additionally it will result in substantial opportunities for other UK companies, e.g. in the financial services, logistics and warehousing sectors not only in Mauritius but also across 20+ countries GMEX is engaged. This will result in an increase in exports and repatriated profits back to the UK estimated at $125mn with 5000 domestic jobs expected to be created over a 5 year period all of which will facilitate additional UK GDP growth. Without DIT involvement and support there would have been much less likelihood that the investment would have gone ahead as a result of reduced confidence and positioning. DIT therefore played a fundamental role in facilitating this through its activities.

Spot trading at MINDEX is due to go live in Q4 2018; it is envisaged that the commodity exchange will become:

  • the first complete ecosystem for gold from the mine to the consumer;
  • an access point for ethical, traceable sources of Gold from Africa; and
  • a hub of recycling for African Gold.

The long-term vision is to expand the exchange to become a hub for African agricultural trade and to include:

  • Derivative contracts on gold, FX and agricultural products;
  • Borrowing and lending of gold and a gold cryptocurrency based firmly on physical assets.