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Friday, 19 April 2024

Kgori Capital chats new path

Business

Kgori Capital has been chattering a difficult path this past couple of weeks, and although the dust has yet to settle, the investment firm is ready to open a new chapter. Kgori Capital has been caught up in a storm following its employees, Bakang Seretse and Botho Leburu’s entanglement in a multimillion pula money laundering case.

At a stakeholders’ meeting on Thursday morning, Kgori Capital distanced itself from both Seretse and Leburu, and the money laundering and any other unethical proceedings thereof.  Kgori’s new management however said the firm would embark on a new chapter all together. Seretse was Managing Director of Kgori Capital prior to his arrest and being charged with a count of money laundering. He has since been replaced by Alphonse Ndzinge.

The company currently manages over P5 billion on behalf of third party clients after losing four, among them the multi-billion pula Botswana Public Officers Pension Fund (BPOPF). BPOPF terminated its 3.5 billion contract with Kgori Capital following Seretse’s money laundering scandal.

The newly appointed Managing Director, Ndzinge revealed that the clients who parted ways with them did so without affording Kgori Capital a chance to absolve the company of any wrong doing. “it is quite unfortunate that we had to go through this as a company, most of these clients that terminated their mandate with us acted out of emotion and were influenced by the media uproar and misinformed public pressure,” he said addressing stakeholders at their CBD offices.  

Ndzinge, who was appointed earlier this week however highlighted that their dumped by the clients hurt their balance sheet significantly.  “Especially the BPOPF mandate, the pension fund was a major client,” he highlighted. Ndzinge underscored that while the loss of some clients was saddening the focus of his company continues to be on delivering excellence for the remaining reputable clients. “We are focused on providing excellent investment outcomes and client services leveraging on depth and breadth of skill and experience to ensure sustainable returns for our investors,” he said.

He reiterated that his company has been purposefully ensuring a healthy client mix to make sure the business was not built around any single client. He added that going forward they will further diversify their mandate management portfolio to ensure sustainability.

Kgori has since cut all ties with Seretse, who tendered his resignation immediately after being granted bail. Kgori Capital reaffirmed that Seretse was no longer under its employ and thus has been removed from the shareholder registry. “Our Shareholder agreement states that shares will only be held by those that are employed by Kgori Capital, we are currently exploring how shares previously held by him will be managed and a process has commenced to pay him the worth of the shares and completely part ways with him,” explained Tshegofatso Tlhong, also an executive member at Kgori Capital.

Tlhong reiterated that the money laundering charges do not in any way reflect on Kgori Capital(Pty) Limited as the company only acted on authorized instructions. “These allegations involve only one client, the Department of Energy, we at Kgori  continue to be a sustainable and stable  firm despite loss of some mandates,” she said.  

The company, which currently employs 12 professionals says it does not anticipate any staff changes going forward “We are a team and we are in this together, our Directors are currently exploring possibilities to broaden shareholding to our staff,” shared Tlhong.

While Ndzinge conceded that the Kgori Capital brand and image has indeed been tarnished to some degree by association, he explained that though a number of inaccuracies were making rounds in public domains, his team has been working hard to set the record straight. “At the same time however we have a long standing reputation for excellent work, transparency and trustworthiness, for our company sustainability we have been conservative in distributing retained earnings over the years and that has allowed us to have a comfortable cushion of reserved and a strong balance sheet to carry us through this slightly difficult time,” he said.

Kgori Capital was established in 2012 by a partnership of local business persons and South African asset Management Company Afena Capital as a Botswana focused investment manager, providing solutions to pension funds, corporate, charities and private personal clients. The company was awarded its first client mandated in 2013.

Kgori Capital management and Staff Trust bought out Afena Capital Group from the company in late 2016 to birth a new 100 % Botswana citizen owned company under the new brand Kgori Capital.  Amid the money laundering, Kgori Capital was awarded a CIU license early this year by regulator NBFIRA. The company says it has since taken a decision to profile and add another lay of KYC (Know Your Clients) for politically exposed clients to avoid any future instances similar to that of the National Petroleum Fund.

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Business

LLR transforms from Company to Group reporting

9th April 2024

Botswana Stock Exchange listed diversified real estate company, Letlole La Rona Limited (“LLR” or “the Company” or “the Group”), posted its first set of group financial statements which comprise the Company and Group consolidated accounts, which show strong financial performance for the six months ended 31 December 2023, with improvements across all key metrics.

The Company commenced the financial year with the appointment of a Deputy Chairperson, Mr Mooketsi Maphane, in order to bolster its governance and enhance leadership continuity through the development of a Board and Executive Management Succession Plan.

At operational level, LLR increased its shareholding in Railpark Mall from 32.79% to 57.79% and proudly took over the management of this prime asset.

The CEO of LLR, Ms Kamogelo Mowaneng commented “During the period under review, our portfolio continued to perform strongly, with improvements across all key metrics as a result of our ongoing focus on portfolio growth and optimisation.

“We are pleased to report a successful first half of the 2024 financial year, where we managed to not only grow the portfolio through strategic acquisitions and value accretive refurbishments but also recycled capital through the disposal of Moedi House as well as the ongoing sale of section titles at Red Square Apartments. The acquisition of an additional 25% stake in JTTM Properties significantly uplifted the value of our investment portfolio to P2.0 billion at a Group level. Our investment portfolio was further differentiated by the quality of our tenant base, as demonstrated by above market occupancy levels of 99.15% and strong collections of above 100% for the period”.

The growth in contractual revenue of 9% from the prior year’s P48.0 million to the current year P52.2 million, increased income from Railpark Mall, coupled with high collection rates, has enabled the company to declare a distribution of 9.11 thebe per linked unit, which is in line with the prior year.

 

In line with its strategic pillars of ‘Streamlined and Expanded Botswana Portfolio’ as well as ‘Quality African Assets’, the Group continuously monitors the performance of its investments to ensure that they meet the targeted returns.

“The Group continues to explore yield accretive opportunities for balance sheet growth and funding options that can be deployed to finance that growth” further commented the CEO of LLR Ms Kamogelo Mowaneng.

Ms Mowaneng further thanked the Group’s stakeholders for their continued support and stated that they look forward to unlocking further value in the Group.

 

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Business

Botswana’s Electricity Generation Dips 26.4%

9th April 2024

The Botswana Power Corporation (BPC) has reported a significant decrease in electricity generation for the fourth quarter of 2023, with output plummeting by 26.4%. This decline is primarily attributed to operational difficulties at the Morupule B power plant, as per the latest Botswana Index of Electricity Generation (IEG) released recently.

Local electricity production saw a drastic reduction, falling from 889,535 MWH in the third quarter of 2023 to 654,312 MWH in the period under review. This substantial decrease is largely due to the operational challenges at the Morupule B power plant. Consequently, the need for imported electricity surged by 35.6% (136,243 MWH) from 382,426 MWH in the third quarter to 518,669 MWH in the fourth quarter. This increase was necessitated by the need to compensate for the shortfall in locally generated electricity.

Zambia Electricity Supply Corporation Limited (ZESCO) was the principal supplier of imported electricity, accounting for 43.1% of total electricity imports during the fourth quarter of 2023. Eskom followed with 21.8%, while the remaining 12.1, 10.3, 8.6, and 4.2% were sourced from Electricidade de Mozambique (EDM), Southern African Power Pool (SAPP), Nampower, and Cross-border electricity markets, respectively. Cross-border electricity markets involve the supply of electricity to towns and villages along the border from neighboring countries such as Namibia and Zambia.

Distributed electricity exhibited a decrease of 7.8% (98,980 MWH), dropping from 1,271,961 MWH in the third quarter of 2023 to 1,172,981 MWH in the review quarter.

Electricity generated locally contributed 55.8% to the electricity distributed during the fourth quarter of 2023, a decrease from the 74.5% contribution in the same quarter of the previous year. This signifies a decrease of 18.7 percentage points. The quarter-on-quarter comparison shows that the contribution of locally generated electricity to the distributed electricity fell by 14.2 percentage points, from 69.9% in the third quarter of 2023 to 55.8% in the fourth quarter. The Morupule A and B power stations accounted for 90.4% of the electricity generated during the fourth quarter of 2023, while Matshelagabedi and Orapa emergency power plants contributed the remaining 5.9 and 3.7% respectively.

The year-on-year analysis reveals some improvement in local electricity generation. The year-on-year perspective shows that the amount of distributed electricity increased by 8.2% (88,781 MWH), from 1,084,200 MWH in the fourth quarter of 2022 to 1,172,981 MWH in the current quarter. The trend of the Index of Electricity Generation from the first quarter of 2013 to the fourth quarter of 2023 indicates an improvement in local electricity generation, despite fluctuations.

The year-on-year analysis also reveals a downward trend in the physical volume of imported electricity. The trend in the physical volume of imported electricity from the first quarter of 2013 to the fourth quarter of 2023 shows a downward trend, indicating the country’s continued effort to generate adequate electricity to meet domestic demand, has led to the decreased reliance on electricity imports.

In response to the need to increase local generation and reduce power imports, the government has initiated a new National Energy Policy. This policy is aimed at guiding the management and development of Botswana’s energy sector and encouraging investment in new and renewable energy. In the policy document, Minister of Mineral Resources, Green Technology and Energy Security Lefoko Moagi stated that the policy aims to transform Botswana from being a net energy importer to a self-sufficient nation with surplus energy for export into the region. Moagi expressed confidence that Botswana has the potential to achieve self-sufficiency in electric power supply, given the country’s readily available energy resources such as coal and renewable sources.

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Business

MMG acquires Khoemacau in a transaction valued at P23Bn

9th April 2024

MMG Limited, the Hong Kong-based mining company specializing in base metals, has successfully concluded the acquisition of Khoemacau Copper Mine, a state-of-the-art, world-class copper asset nestled in the northwest of Botswana.

On Monday, MMG announced that the acquisition of Khoemacau Mine in Botswana was finalized on 22nd March 2024. “This acquisition enriches the company’s portfolio with a top-tier, transformative growth project and signifies a monumental milestone in the Company’s journey,” MMG communicated in an official statement published on the Hong Kong Stock Exchange.

Upon completion of the acquisition, MMG remitted to the Sellers an Aggregate Consideration of approximately US$1,734,657,000 (over P23 billion), a sum subject to potential adjustments post-Completion.

In addition to the Aggregate Consideration, MMG, in accordance with the Agreement, advanced an aggregate amount of approximately US$348,580,000 (over P4.5 billion) as the Aggregate Debt Settlement Amount, to settle certain debt balances of the Target Group (Cuprous Capital/Khoemacau).

On November 21, 2023, Khoemacau announced that the shareholders of its parent company [Cuprous Capital] had agreed to sell 100% of their interests to MMG Limited.

MMG is a global resources company that mines, explores, and develops copper and other base metals projects on four continents. The company is headquartered in Melbourne, Australia, and has a significant shareholder, China Minmetals Corporation, which is China’s largest metals and minerals group owned by the Government of the People’s Republic of China.

On December 22, 2023, Khoemacau Copper Mining (Pty) Ltd received the approval from the Minister of Minerals and Energy of Botswana regarding the transfer of a controlling interest in the Project Licenses and Prospecting Licenses associated with the Khoemacau Copper Mine, a result of the Acquisition.

 

The Botswana Competition & Consumer Authority (CCA) on January 29, 2024, notified the market that it had given its approval for the takeover of Khoemacau Copper Mining by MMG Limited.

On January 29, 2024, the CCA issued a merger decision to the market, stating that after conducting all necessary assessments, it was ready to proceed.

The Competition Authority affirmed that the structure of the relevant market would not significantly change upon implementation of the proposed merger as the proposed transaction is not likely to result in a substantial lessening of competition, nor endanger the continuity of service in the market of mining of copper and silver ores and the production, and sale or supply of copper concentrate in Botswana.

Furthermore, the CCA stated that the proposed merger would not have any negative impact on public interest matters in Botswana as per the provisions of section 52(2) of the Competition Act 2018.

Earlier this month, Minister of Minerals & Energy, Lefoko Maxwell Moagi, informed parliament that his Ministry was endorsing the Khoemacau acquisition by MMG Limited. He noted that not only was the company acquiring the existing operation but also committing to an expansion program that would cost over $700 million to double production, create more jobs for Batswana, and increase taxes and royalties paid to the Government.

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