Kick’s acquisition of DTOS Capital Markets marks a new step in its ambition to build a ‘small Goldman Sachs without arrogance’, expanding from corporate finance and advisory into stockbroking and asset management. The two founding members say the move is also about unlocking Mauritius’ underutilised capital market and encouraging Mauritians to move beyond traditional saving towards intelligent investing.

Kick has essentially built its business around corporate finance and advisory services. Does the acquisition of DTOS Capital Markets represent a significant shift in the company’s core activity and business model, or is it essentially an extension of what Kick already does?

Afsar Ebrahim (AE): This is a natural extension for a corporate finance boutique firm. When we set up in July 2020, we did say our vision at Kick Advisory was to build a small Goldman Sachs without the arrogance. This acquisition is a small step towards that vision. Our service offerings now include M&A, fund raising (equity and debt), stockbroking and asset management.

Pierre d’Unienville (PU) : The vision was always to offer the largest possible range of services that typically fall under the wide spectrum of ‘investment banking’. This acquisition is a step towards the fulfilment of the vision.

What was the strategic rationale behind acquiring DTOS Capital Markets at this particular stage of Kick’s development? What gap in your existing offering were you looking to fill?

AE : The rationale is to have a comprehensive service offering for the clients we serve in Mauritius, East Africa, the UAE and India. We believe that the Mauritius International Finance Centre (IFC) has untapped potential which we as operators must strive to fulfil. The gap we have identified is that we want our clients to know that Mauritius has a lot to offer and, with us, they have trusted professionals with capabilities to execute their strategies.

PU : Stockbroking is a logical and natural extension of our business, as, up to now, if we are advising for a transaction involving a listed company, we are unable to accompany our client for the very last step, which is the actual transfer of shares on the exchange. That gap is now closed.

How do you see the balance evolving between corporate advisory, stockbroking, investment advisory and asset management within the enlarged Kick group? Is the ambition eventually to make capital markets and asset management a major growth engine?

AE : There is no balance as such. It is a 360-degree service offering. All the service lines converge in creating value for clients, wherever they are located. Our main focus will always be our core activity of deal-making. We can support it now with fund raising, and we can now offer listing as an option for fund raising. KICK is now a one-stop boutique firm and only a phone call away.

PU : As I said, the vision is to offer services that encompass the widest spectrum within our industry. So yes, obviously, the aim is to grow these businesses alongside our core business, and not replace it in any way. We are now able to offer additional services to our clients, and we believe that this makes our offering more palatable and stronger.

You argue that Mauritius’ capital market remains significantly underutilised. What, in your view, is holding back greater participation by both companies and individual investors? And what can Kick realistically do to change that?

AE : Mauritian investors have been few and far between. There is no culture of saving in Mauritius and investing in the stock market appears far down the pecking order for the small community of savers. We do have great champions in various sectors and some are going beyond borders, be it IBL, ER, CIEL, Omnicane, NMH or Constance. Companies like Emtel and Lottotech have been delivering outstanding results, yet only MCB seems to be flying the flag in terms of market progression. Financial performance and market performance have not been in sync. There is value waiting to be unlocked.

PU : Individual investors, in particular, have deserted local equity tickers to either invest in bonds or on foreign markets. The role Kick Capital Markets will aim to play is, through careful research and analysis, to demonstrate that the companies mentioned by Afsar – and others – offer great return potential.

You have spoken about the ambition of having ‘every Mauritian household’ become an investor. Is Kick looking primarily at the retail market, or do you see greater opportunities in institutional and high-net-worth investors? How do you intend to broaden access to investment products?

AE : As an IFC we have not succeeded in educating the population to save intelligently. The main form of saving remains fixed deposits. This has to be broadened. We will be looking at institutional investors, including foreign ones, for material impact on our business. However, we have a duty to encourage retail investors and we want to have a solid foundation of retail investors, who are less volatile, and aim to provide them with the platform to gauge the opportunity and manage their risks for reasonable returns. We have a few cards up our sleeves which we will communicate as we progress.

PU : I was always fond of the ‘all of the above’ option when confronted with multiple-choice questions back at school. So I will use that joker once again. There is, in fact, no need to choose among these constituencies, and Kick Capital Markets will be structured to serve all of them.

The transaction also strengthens Kick’s regional ambitions, particularly in Africa and through its presence in India. What specific cross-border opportunities do you expect the new capital-markets platform to unlock?

AE : We shall start rolling out our various strategic alliances in different markets by encouraging investors from those markets to look at our offerings in the Mauritius IFC, including listings. We are also working on plans to offer sophisticated Mauritian investors access to stocks in foreign markets. It will be a circular investment cycle through KICK.

PU : Capital raising is already a pillar of our corporate finance business — the addition of a stockbrokerage service to our range obviously allows us to propose the listing of debt products on the local exchange. At this early point in time, we can foresee African clients needing to tap the capacities of our local exchange, though how this will be accomplished will be refined over time.

What are the biggest challenges in integrating DTOS Capital Markets into Kick? Beyond the rebranding to Kick Capital Markets, what changes should clients and the market expect over the next 12 to 24 months?

**AE*v : It is a strategic shift, which has been a predominantly B2B business, to start making inroads into B2C based on an exceptional service offering. DTOS Capital Markets is a business that is operationally heavy, and we have invested in having the right resources in place for a seamless operation. Also, we have to be very compliance-driven, as we are in a regulated environment both with Kick Advisory and Kick Capital Markets. There is no room for error when it comes to compliance.

PU : The rebranding itself is perhaps the more straightforward part of the integration. Over the past six years, Kick has already built strong brand recognition and credibility in the corporate finance and advisory space. Kick Capital Markets will therefore benefit from an established name, network and reputation, while extending the Kick brand to a broader client base.

AE: Over the next 12 to 24 months, clients can expect an expanded range of investment services, a strong emphasis on accessibility and client service, and new solutions progressively introduced to the market.

PU : As we have already mentioned to you earlier, for our existing clients stockbroking is an additional service we are offering. Our clients will also benefit from our asset-management capability — say, if we sell a client’s business for a large amount, he can now safely invest these funds through Kick Capital Markets. As for existing clients of the business, they can now be sure that we shall provide the best service through our laser focus on execution.