Understanding fund vehicles in Mauritius
Mauritius offers two major categories of collective investment vehicles, each suited to distinct strategies and investor profiles: Collective Investment Schemes (CIS), or open-ended funds, and Closed-End Funds (CEF), or closed-ended funds. Both structures are governed by the Securities Act 2005 and supervised by the Financial Services Commission (FSC).
The choice between a CIS and a CEF depends mainly on the liquidity of the investment strategy, the profile of the targeted investors, the intended time horizon and tax considerations related to the target markets. The legal vehicle is generally a Global Business Company, which allows access to the effective 3% rate and to Mauritius's double taxation treaties. Our team supports you in this analysis to design the optimal structure.
Collective Investment Schemes (CIS) — Open-ended funds
Definition and operation
A CIS is a collective investment vehicle in which investors pool their capital to invest according to a strategy defined by the manager. The fundamental characteristics of a CIS are:
- Redeemable units — Investors may request redemption of their units at regular intervals (daily, weekly, monthly)
- Periodically calculated NAV — The net asset value determines the subscription and redemption price of the units
- Continuous subscription — New investors may join the fund at any time (subject to the conditions of the prospectus/PPM)
- Liquidity obligations — The fund must maintain a sufficient level of liquidity to honour redemption requests
- Diversification — CIS Global funds are subject to strict diversification rules; Professional and Expert CIS benefit from greater flexibility
The four CIS categories in detail
| Category | Target investors | Minimum ticket | Offering document | Regulation |
|---|---|---|---|---|
| CIS Global | General public | None | Full prospectus | Strict: mandatory diversification, minimum weekly NAV, mandatory custodian |
| CIS Professional | Qualified investors | USD 100,000 | PPM | Lighter: investment flexibility, monthly NAV |
| CIS Specialized | Depending on strategy | Variable | PPM or prospectus | Adapted to the nature of the fund (real estate, Islamic, fund of funds) |
| CIS Expert | Sophisticated investors | USD 100,000 | Simplified PPM | Minimal: accelerated process (2-4 weeks), high strategic flexibility |
Legal forms available for a CIS
A CIS can be structured under different legal forms, each with specific advantages:
Company
The most common form. Offers a distinct legal personality, limited liability for investors, and clear governance with a board of directors. Suited to funds of any size.
Unit Trust
A fiduciary structure with a trustee responsible for managing the assets. Particularly used for real estate funds and funds distributed to Common Law investors.
Limited Partnership
Very popular for private equity. Allows flexible allocation of profits and losses between the General Partner (manager) and Limited Partners (investors). Fiscal transparency possible.
Protected Cell Company (PCC)
A multi-compartment structure with legal segregation of assets and liabilities of each cell. Ideal for fund platforms and multi-strategy structures at reduced cost.
Advantages of the CIS Expert Fund
The CIS Expert Fund is the vehicle most used by international managers in Mauritius for its speed of set-up and flexibility. It stands out through:
- An accelerated FSC approval process (2-4 weeks vs 6-10 for a CIS Global)
- No obligation to publish a full prospectus — a simplified PPM is sufficient
- High flexibility in investment strategy and diversification rules
- Ability to invest in illiquid or alternative assets (private equity, real estate, crypto-assets)
- Reduced regulatory fees compared to CIS Global
- Possibility of side pockets and multiple unit classes
Recommendation: For international fund managers launching a first vehicle in Mauritius, the CIS Expert Fund offers the best flexibility/cost/timeline ratio. It suits hedge funds, private equity funds and multi-strategy funds aimed at qualified investors.
Closed-End Funds (CEF) — Closed-ended funds
Definition and characteristics
A Closed-End Fund is a fixed-capital investment vehicle, designed for long-term strategies requiring capital stability. Governed by the FSC Rules on Closed-End Funds, it has the following characteristics:
- Fixed capital — The fund raises a determined amount during an initial subscription period (first closing, final closing)
- No mandatory redemption — Investors cannot request repayment of their units during the fund's lifespan
- Defined lifespan — Generally 7 to 12 years, with the possibility of a 1-2 year extension upon vote of the Limited Partners
- Progressive capital calls — Committed capital is called as investment needs arise (capital calls)
- Distributions — Returns are distributed to investors upon realisation (exit) of the underlying investments
- Investment period — Typically 3-5 years, followed by a divestment period
Manager remuneration structures
CEFs use the classic "2 and 20" remuneration structure with possible variations:
| Component | Description | Market rate |
|---|---|---|
| Management Fee | Annual management fee on committed capital (investment period) then on invested capital | 1.5% - 2% |
| Carried Interest | Profit share beyond the hurdle rate, with a catch-up mechanism | 20% |
| Hurdle Rate | Preferred return to be reached before carried interest is calculated | 8% (IRR) |
| Clawback | Obligation for the manager to repay excess carried interest at the end of the fund's life | Market standard |
Waterfall mechanism
The distribution of returns follows a four-tier waterfall mechanism, customisable in the fund's documentation:
-
Return of Capital
Full repayment of invested capital to the Limited Partners before any distribution of profits.
-
Preferred Return
Distribution of the preferred return (hurdle rate, typically 8% IRR) to the Limited Partners on invested capital.
-
GP Catch-Up
The General Partner receives 100% of distributions until catching up on its share of carried interest (20% of total profits).
-
Profit Split
Excess profits are split 80/20 between the Limited Partners and the General Partner (carried interest).
Typical applications of CEFs in Mauritius
Private Equity Africa
Equity investments in unlisted companies in Africa. Mauritius offers 16 African tax treaties and access to SADC/COMESA. It is the jurisdiction of choice for Africa-focused PE funds.
Venture Capital
Financing of startups and growth-stage companies, notably in fintech, healthtech and agritech. Mauritian CEFs structure investments in Africa and India.
Infrastructure
Renewable energy, transport, telecommunications and logistics projects on the African continent. Extended lifespan (12-15 years) suited to long investment cycles.
Real estate & private debt
Funds investing in commercial and residential real estate projects, or in direct loans to companies and structured finance. Mezzanine and senior debt structures.
Comparison: CIS vs Closed-End Fund
| Criterion | CIS (Open-ended fund) | CEF (Closed-ended fund) |
|---|---|---|
| Liquidity | Continuous subscription/redemption | No redemption during the lifespan |
| Lifespan | Indefinite | Defined (7-12 years + extensions) |
| Capital | Variable (open-ended) | Fixed (progressive capital calls) |
| NAV | Daily to monthly | Quarterly or semi-annual |
| Suitable strategies | Listed equities, bonds, hedge funds, multi-asset | Private equity, real estate, infrastructure, private debt |
| Manager remuneration | Management fee + performance fee | Management fee + carried interest |
| Time to set up | 2-8 weeks (depending on category) | 4-8 weeks |
| Common legal structure | Company, Unit Trust, PCC | Limited Partnership, Company |
| Reporting | NAV + monthly/quarterly factsheets | Quarterly reports to investors (LP reports) |
FSC licensing process
Required documents
The licence application to the FSC must include a complete file:
- The application form duly completed and signed by the promoters
- The Private Placement Memorandum (PPM) or full prospectus (depending on category)
- The fund's Constitution: memorandum and articles (Company), limited partnership agreement (LP) or deed of trust
- Detailed CVs and references of directors, managers, promoters and beneficial owners
- A detailed business plan including the investment strategy, target markets and financial projections
- Signed or near-final service agreements with the administrator, custodian and auditor
- Compliance policies: AML/KYC, conflicts of interest, risk management, asset valuation
- Proof of payment of FSC licensing fees
- Due diligence forms (fit and proper) for each key person
Timeline and approval process
-
FSC pre-consultation (optional, 1-2 weeks)
Informal discussion with the regulator to present the project, clarify requirements and identify potential sticking points. Strongly recommended for complex structures.
-
Submission and initial review (5-10 days)
Filing of the complete file with the FSC. Verification of the file's completeness and identification of missing documents.
-
Due diligence and analysis (2-6 weeks)
Thorough background checks on directors and promoters (fit and proper test). Analysis of legal documentation. Possible requests for additional information.
-
Decision and licence issuance
Approval, conditional approval (with conditions to be satisfied) or reasoned refusal. If approved, registration of the fund and issuance of the FSC licence.
Optimal structuring: our recommendations
The choice of the optimal structure depends on several key factors that our experts analyse with you:
Investment strategy
Liquid vs illiquid assets, short- or long-term investment horizon, sector or geographic concentration, use of leverage.
Investor profile
Institutional investors, family offices, HNWIs, retail investors. Geographic origin and regulatory constraints of each investor jurisdiction.
Target markets
Africa (SADC/COMESA treaties), India (DTAA + CECPA treaty), South-East Asia, developed markets. Optimisation via Mauritius's tax treaties.
Operational considerations
Budget for service providers, AIFMD or Dodd-Frank requirements of investors, multi-jurisdictional needs (Mauritius + Luxembourg, Mauritius + Cayman).
Expert advice: For a private equity fund targeting Africa with European and American institutional investors, the optimal structure is often a Limited Partnership CEF in Mauritius, combined with a feeder fund in the Cayman Islands (US investors) and/or in Luxembourg (EU investors under AIFMD).
Launch your fund in Mauritius
Our team supports you in analysing all these factors and designing an optimal fund structure, in collaboration with your legal and tax advisors. From FSC pre-consultation to the first closing, we coordinate the entire process.