First Capital Bank devours Bank of India
Business
First Capital Bank Botswana is moving to sweep out the footprints of Bank of India Botswana, by taking over its local business, following the Indian banker last year decision to shut down its local subsidiary.
Bank of India Botswana was said to be among culprits contributing to the Indian born financial institution being dogged by “a sharp rise in non-performing assets (NPAs)” for almost two years since the last quarter of December 2017. The operations in India, positive and negative, directly affect Bank of India’s subsidiaries including the one in Botswana. As if being marred by failure to compete financially and having ballooning NPAs due to worsening asset quality, the Reserve Bank of India (Indian central bank) has currently raised a red flag on Bank of India and other 10 private bankers by placing stern restrictions on them “not to issue any fresh loans and should hire new personnel.”
According to reports from the Asian country, the Indian central bank is imposing sanctions “as restrictions on couple to enforce certain restrictions on couple of more public sector lenders under the Prompt Corrective Action mechanism due to worsening asset quality and Bank of India has been failing to put down the red flag placed against it. Last year’s reports said Bank of India will close three subsidiaries in Botswana, Uganda and New Zealand in a desperate move to salvage capital.
According to reports Bank of India is selling its operations so that it can raise P500 million in capital which it can then use to shore up its domestic capital. Since setting its footprints in Botswana six years ago, Bank of India has managed to plough only on e branch cum head office in Botswana. Regarded as one of the top five banks in India is 113 years old and it was once state-owned entity before becoming nationalized in 1969.
First Capital Bank, the entity acquiring, has been ongoing a process of rebranding and seeks to grow according to its Botswana management. Formerly Capital Bank, First Capital Bank has banking and finance operations in Botswana, Malawi, Mozambique, Zambia and Zimbabwe. It has four branches in Botswana and it will be clenching its claws on the two operations which are run by Bank of India.
First Capital Bank has so far proposed acquisition of 100 percent issued and paid up ordinary shares of Bank of India Botswana to Competition Authority of Botswana. The antitrust body is currently assessing to see if there arises any anti-competition practice in this acquisition.
“According to section 57(3), of the Competition Act, “any person, including a third party not a party to the proposed merger, may voluntarily submit to the inspector or the Authority any document, affidavit, statement or other relevant information in respect of a proposed merger”.
The Competition Authority therefore seeks any stakeholder views for or against the proposed merger, which may be sent within 10 days from date of this publication (12 February 2019),” said the Competition Authority. While investigating the acquisition, the Competition Authority has found that First Capital Bank is a company incorporated in accordance with the Laws of Botswana but controlled by First Capital Bank Plc Malawi; Everglades Holdings (Pty) Ltd, Botswana; Premier Capital Ltd, Mauritius; Prime Bank Ltd, Kenya; and members of the Anadkat Family.
“First Capital Bank Plc is a commercial bank registered in Malawi and listed on the Malawi Stock Exchange, with no other business interests in Botswana. Everglades Holdings (Pty) Ltd is an investment holding company wholly owned by Hemantkumar Kantilal Patel, a British citizen with other diverse business interests in Botswana, not within the banking sector. Prime Bank Ltd is a commercial bank registered in Kenya, with no other business interests in Botswana.
Premier Capital Mauritius Ltd is wholly owned by Hitesh Natwarial Anadkat (the non-executive Chairman of First Capital Bank plc Malawi) with no other business interests in Botswana. The Anadkat family being Hitesh N. Andakat’s wife and children holds British passports with no other business interests in Botswana,” says the local antitrust body. Competition Authority further states that First Capital Bank is a commercial bank, providing deposits, loans to corporates, individuals and Small Medium Micro Enterprises [SMMEs].
First Capital Bank operates a total of four branches and five loan centres across Botswana, specifically in Francistown, Gaborone, Kanye, Mochudi, Mogoditshane and Palapye, according to the antitrust body. It further states that First Capital Bank has two subsidiaries: Diron Ridge (Pty) Ltd and Jetwig Enterprises (Pty) Ltd; both of which are not in operation.The Directors of FCBL are Hitesh N. Anadkat; Hemantkumar K. Patel; Stephen D. Pezarro (all British); Daniel Swabi, Judy N. Tsonope and Boitumelo K. Tibone (all Batswana), says Competition Authority.
The Directors of Bank of India Botswana, the entity targeted for acquisition by First Capital Bank, are Atanu K. Das; Uddalok Bhattacharya (both Indians); Naseem B. Lahri; Tlhopane N. Motsepe; Felicia B. January and Pauline Oreeditse Motswagae (all Batswana).
Business
Grit divests from Letlole La Rona
Grit Services Limited, a member of the pan African real estate group, London Stock Exchange listed Grit Real Estate Income Group is divesting from Letlole La Rona Limited (LLR), a local real estate company established by government investment arm Botswana Development Corporation over a decade ago.
The Board of Directors of Letlole La Rona Limited this week announced in a statement to Unitholders that Grit Services Limited (‘Grit’) has informed them of its intention to exit its investment in the company.
Grit has been a material shareholder in LLR since 2019. On 07 March 2023, Grit sold 6 421 000 linked units, representing 2.29% of the Company’s total securities in issue, at a market value of BWP 22 537 710.
This trade follows previous sales of 6.79% in December 2022, as communicated to Unitholders on 10 January 2023, as well as a further sale of 4.78% (representing 13 347 068 linked units) on 24 February 2023 to various shareholders.
In aggregate, Grit has sold 13.9% shareholding in the Letlole La Rona between December 2022 and March 2023, resulting in current shareholding of 11.25% in the Company.
Letlole La Rona said in the statement that the exit process will take place in an orderly manner so as to maintain stability of the Company’s share price.
The statement explained that Grit’s sale of its entire shareholding in LLR is in line with its decision to exit investments where it does not have majority control, or where it has significant exposure to currencies other than US dollar, Euro or hard-currency-pegged revenue streams.
“Grit has announced similar decisions pertaining to certain of its hospitality assets in Mauritius recently. The Company would like to advise Unitholders that it remains focused on long-term value delivery to all stakeholders” LLR said
In July last year as part of their Go-to-Africa strategy Letlole La Rona acquired an initial 30% equity stake in Orbit Africa Logistics, with an option to increase this investment to 50%. OAL is a special purpose vehicle incorporated in Mauritius, owning an industrial asset in a prime industrial node in Nairobi, Kenya.
The co-investment was done alongside a wholly owned subsidiary of London listed Grit. The Orbit facility is situated on a prime industrial site on Mombasa Road, the principal route south of Nairobi center, serving the main industrial node, the port of Mombasa and the industrial town of Athi River and is strategically located 11 kilometers south of the international airport and 9.6 kilometers from the Inland Container Depot.
Grit shareholding in Letlole La Rona was seen as strategic for LLR, for the company to leverage on Grit’s already existing continental presence and expand its wings beyond Botswana borders as already delivered by Kenya transaction.
Media reports have however suggested that LLR and Grit have since late last year had fundamental disagreements on how to go about the Go-to-Africa strategy amongst other things, fuelled by alleged Botswana government interference on the affairs of LLR.
Government through LLR founding shareholder – Botswana Development Corporation has a controlling stake of around 40 percent in the company. Government is the sole shareholder of Botswana Development Corporation.
Letlole La Rona recently released their financial results for the six months ended December 2022, revenue increased by 4% to P50.2 million from P48.4 million in the prior comparative six months, whilst operating profit was up 8% to P36.5 million. Profit before tax of P49.7 million was reported, an increase of 8% on the prior comparative six months.
“We are encouraged by the strong results, notwithstanding a challenging economic environment. Our performance was mainly underpinned by annual lease escalations, our quality tenant base and below average market vacancy levels, especially in our warehouse portfolio,” Kamogelo Mowaneng, Letlole La Rona Chief Executive Officer commented.
LLR reported a weighted average lease expiry period of 3.3 years and escalation rates averaging 6.8% per annum for the period ended 31 December 2022.Its investment portfolio value increased by 14% year-on-year to close the period at P1.4 billion, mainly driven by the acquisition of a 30% stake in OAL in July 2022.
The Company also recorded a significant increase in other income, predominantly due to foreign exchange gains on the OAL shareholder loan. “We continue to explore pipeline opportunities locally, and regionally in line with our Go-to-Africa strategy and our interest remains on value-accretive investments,” Mowaneng said.
An interim distribution of 9.11 thebe per linked unit was declared on the 6th of February 2023 for the half-year period to 31 December 2022, comprising of a dividend of 0.05 thebe and debenture interest of 9.06 thebe per linked unit which will be paid to linked unit holders registered in the books of the Company at the close of business on 24 February 2023.
Business
Stargems Group establishes Training Center in BW
Internationally-acclaimed diamond manufacturing company StarGems Group has established the Stargems Diamond Training Center which will be providing specialized training in diamond manufacturing and evaluation.
The Stargems Diamond Training Institute is located at the Stargems Group Botswana Unit in Gaborone.
“In accordance with the National Human Resource Development Strategy (NHRDS) which holds the principle that through education and skills development as well as the strategic alignment between national ambitions and individual capabilities, Botswana will become a prosperous, productive and innovative nation due to the quality and efficacy of its citizenry. The Training Centre will provide a range of modules in theory and in practice; from rough diamond evaluation to diamond grading and polishing for Batswana, at no cost for eight weeks. The internationally- recognized certificate offered in partnership with Harry Oppenheimer Diamond Training School presents invaluable opportunities for Batswana to access in the diamond industry locally and internationally. The initiative is an extension of our Corporate Social Investment to the community in which we operate,” said Vishal Shah, Stargems Group Managing Director, during the launch of the Stargems Diamond Training Center.
In order to participate in this rare opportunity, interested candidates are invited to submit a police clearance certificate and a BGCSE certificate only to the Stargems offices. Students who excel in these programs will have the chance to be onboarded by the Stargems Group. This serves as motivation for them to go through this training with a high level of seriousness.
“Community empowerment is one of our CSR principles. We believe that businesses can only thrive when their communities are well taken of. We are hoping that our presence will be impactful to various communities and economies. In the six countries that we are operating in, we have contributed through dedicating 10% of our revenues during COVID-19 to facilitate education, donating to hospitals and also to NGOs committed to supporting women and children living with HIV. One key issue that we are targeting in Botswana is the rate of unemployment amongst the youth. We are looking forward to working closely with the government and other relevant authorities to curb unemployment,” said Shah.
Currently, Stargems Group has employed 117 Batswana and they are looking forward to growing the numbers to 500 as the company grows. Majority of the employees will be graduates from the Stargems Diamond Training Center. This initiation has been received with open arms by the general public and stakeholders. During the launch, the Minister of Minerals and Energy, Honorable Lefoko Moagi, stated that the ministry fully endorses Stargems Diamond Training and will work closely with the Group to support and grow the initiative.
“As a ministry, we see this as an game changer that is aligned with one of the United Nations’ Six Priority Sustainable Development Goals, which is to Advance Opportunity and Impact for Diversity, Equity, and Inclusion (DEI). What Stargems Group is launching today will have a huge impact on the creation of employment in Botswana. An economy’s productivity rises as the number of educated workers increases as its skilled workmanship increases. It is not a secret that low skills perpetuate poverty and widen the inequality gap, therefore the development of skills has the potential to contribute significantly to structural transformation and economic growth by enhancing employability and helping the country become more competitive. We are grateful to see the emergence of industry players such as Stargems Group who have strived to create such opportunities that mitigate the negative effects of COVID-19 on the economy,” said the Minister of Minerals and Energy.
Business
Food import bill slightly declines
The latest figures released by Statistics Botswana this week shows that food import bill for Botswana slightly declined from around P1.1 billion in November 2022 to around P981 million in December during the same year.
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