The Botswana Stock Exchange (BSE) on Wednesday reached an epic milestone by listing two international entities on the same day.
The two companies that listed simultaneously are Australian founded Company, Tlou Energy which intends to bring power to Botswana and Southern Africa through Coal Bed Methane (CBM); and the World Bank Group sister company, the International Finance Corporation (IFC). BSE executives expressed delight at the two listings of which the Tlou Energy listing made a total of equity listings three (3) so far in 2017 and the IFC Bond brought the number of bonds issued so far in 2017 to five (5).
When delivering welcome remarks at the listing ceremony held in Gaborone at the Stock Exchange House, BSE Chief Executive Officer, Thapelo Tsheole reiterated that listings were a watershed moment in the progress of his organisation because this was the first time in history that witnessed two listings in one day. “With the addition of Tlou Energy, we are happy to celebrate a total of three equity listings so far in 2017; the IFC Bond will bring the total number of bonds issued so far in 2017 to six,” he said.
HISTORY IN THE MAKING
Tlou Energy seeks to raise around BWP33, 000,000 to fund predevelopment activities at its Lesedi CBM Project. The company listed the entire issued ordinary share capital of Tlou Energy Ltd on the Main Board of the BSE. Managing Director of Tlou Energy, Gabaake Gabaake underscored the delight of his company after the successful listing on the growing BSE board. He said the undertaking will give Batswana an opportunity to own profits from coal and energy operations sourced right in their own back yard.
Tlou Energy is an AIM and ASX listed company whose business involves the appraisal for and proposed production of CBM gas. Currently the company‘s focus is on its mining and prospecting projects for Botswana deposits which are considered highly prospective for CBM, with sizeable independently assessed CBM Reserves and Resources.
Gaabake highlighted that his company plans to augment the energy requirements of the Southern African region. The regions is currently experiencing energy deficits at a period where both its population and economies are growing rapidly. “Tlou Energy intends to supply CBM gas to enable gas-powered generators to supply electricity and to replace existing diesel and coal fired power generation. The long-term objective of the Company is to build a mid-tier energy provider in southern Africa,” he said when sharing the overview of his company to prospective investors just before ringing the bell.
Tlou Energy’s most advanced project, the Lesedi CBM Project, is located in the Karoo Kalahari Basin in south-eastern Botswana. Having advanced the Lesedi Project, through the exploration and appraisal phase, Tlou Energy is now focused on development. The Managing Director shared that the decision to apply for a listing of Tlou Energy’s shares on the BSE is meant to enable the company to facilitate local investment in the project, and ensure that local investors have the opportunity to share in the upside associated with the emerging CBM industry in Botswana and returns on the associated infrastructure.
International Finance Corporation is a worldwide organization under the World Bank Group which issued and listed its Pan –African Domestic medium term note programme. The programme has been established in various African jurisdictions, including Botswana and was approved by the BSE on 1st December 2017, and on the same date the IFC issued notes with an aggregate nominal value of BWP260, 000,000 under a Programme Memorandum.
It was established in 1956 to further economic growth in its developing member countries by promoting private sector development. The IFC is a member of the World Bank Group, which also comprises the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the Multilateral Investment Guarantee Agency (“MIGA”) and the International Centre for Settlement of Investment Disputes (“ICSID”).
In partnership with private investors, the IFC assists in financing the establishment, improvement, and expansion of private sector enterprises by making investments where sufficient private capital is not otherwise available on reasonable terms. Oumar Sydi, IFC’s Head of African region said his organizations seeks to bring together domestic and foreign private capital and experienced management and thereby create conditions conducive to the flow of private capital (domestic and foreign) into productive investments in its developing member countries. The bond which is worth over 250 million pula has since been declared to be channeled to Botswana Building Society (BBS)’s expansion and transformation into a fully fleshed commercial bank.
Furthermore the BSE CEO, Tsheole explained that, “We have since to date now also realized a total number of 6 bonds issued with the recent one before the IFC being that of the Botswana Development Corporation.” On equity listing this year, the BSE saw the delisting of 2 companies, Imara Holdings Limited and Golane Gold on March 31st and 11th August respectively which collectively held a total market capitalization of 1.2 billion pula. Total 2017 listings topped up the market capitalization by P2.3 billion with P575 million of total capital raised including the Tlou Energy listing.
Tsheole further highlighted that the listings will advance the domestic bourse. “Continentally, listings are low this trading period owing to a number of economic issues, companies are delisting eyeing for major exchanges so we are honored by the confidence of this two entities in our economy and stock exchange,” he said.
In the coming months prices will go up and inflation will shoot sharply above the target of 3 percent to 6 percent towards the third quarter of 2021, the Bank of Botswana on the other hand will continue to withhold its knife on the Bank Rate. This is according to a forecast made by Kgori Capital in its recent Market Watch Segment.
Statistics from Statistics Botswana show that the recent 1.8 percent increase in the September inflation, from 1 percent in August, was a reflection of the upward adjustment in public transport fares (Transport (from -6.9 to -3.9 percent) in September 2020, which is estimated to have increased inflation by approximately 0.64 percentage points.
Local anti-trust body, Competition and Consumer Authority (CCA), this month received back to back acquisition proposals from South African clothing retailers to wipe out their former rivals, Edcon, from Botswana malls.
Last week BusinessPost was in possession of Merger Notice No 23 of 2020 whereby a South African clothing retailer owner, Retailability Proprietary Limited, through Oclin Proprietary Limited, proposed to acquire parts of the Edgars business conducted by Edcon in Botswana (through Edcon Botswana), as a going concern, consisting of certain assets and identified liabilities.
South African government’s Business Rescue Practitioners earlier this year announced that Retailability will buy Edgars, after the latter filed for a business rescue plan in April after it failed to pay suppliers. This move will see Retailability add Edgars to its portfolio consisting of brands such as; Legit, Beaver Canoe and Style.
Retailability landed on Botswana shores 18 years ago with its flamboyant urban fashion Style which had 17 stores. Style, having almost the same target market as Edgars as it offers men’s and ladies’ contemporary and formal fashion, gave the 91 year old legendary clothing retailer a run for its money, and has won the battle as its parent company has taken over Edgars.
Retailability brands are synonymous with Botswana shopping centres and there are currently five (5) Beaver Canoe stores, 10 Style stores and seven (7) Legit stores across this country. The Beaver Canoe stores sell clothing apparel for men and boys only. The Legit stores have a fashion store format which focuses on the retailing of clothing, footwear, accessories, colour cosmetics and cellular products.
Retailability operates in over 460 stores across South Africa, Namibia, Botswana, Lesotho, and Eswatini. Many observers suggest that because of the deal with Retailability to swallow Edcon, most Edgars stores in Botswana will change their name and be branded Style. A sad tale for religious consumers of the Edgars trademark who got used to love their favourite brand for years.
According to CCA’s Merger Notice No 23 of 2020, Retailability is controlled by Clifford Raymond Lines (through a company which functions solely as a holding company of his interests in Retailability) and Metier Investment and Advisory Services Proprietary Limited (“Metier”). Metier is a private equity enterprise with investments in a number of industries spanning from healthcare, hospitality, FMCGs and telecommunications.
Retailability directors are mostly South Africans; Clifford Raymond Lines, Mark Richard Friday and Norman Victor Drieselmann. Only Nasreen Essack, who was appointed February this year, is a Motswana. He comes after Brian Thuto Tsima left on the same date. Retailability 100 percent owns Oclin Proprietary Limited, the company it is acquiring Edgars with, by a capacity of 3000 shares.
The target business, Edgars, offer textiles, cosmetics and cellular products. Edcon has a Motswana director, Charles Mzwandile Vikisi, a South African, Shane Van Niekerk and Zimbabwean Jethro Kamutsi.
“The Target Business comprises of two (2) Edgars franchise brands and private label stores across Botswana. These stores target middle to upper income customers and are home to a range of private label brands such as Free2BU, Charter Club and Stone Harbour, and a wide range of market label brands (such as Levi’s and Guess) for clothing, footwear and cosmetics.
In addition, the Target Business operates iconic Edgars Home and Edgars Beauty stores as store-in-store formats rounding out the department store offering in Botswana,” said CCA. Foshini also lines up to take Jet Botswana from Edcon.
The Foschini Group (TFG) released a statement confirming its latest intentions to acquire Edcon assets or Jet for a cash purchase consideration of R480 million. This was after the business rescue practitioners offered TFG to buy Jet by that amount.
CCA is currently mulling on a proposed merger by TFG to take over Jet operations in Botswana. Merger Notice No 21 of 2020 from TFG came a few days before the Retailability proposal. In this merger TFG, acting through Foschini Botswana, want to take over “parts” of the Jet business conducted by Edcon through Jet Supermarkets Botswana.
TFG will be willing to add Jet to its portfolio of 30 retail brands that trade in clothing, footwear, jewellery, sportswear, homeware, cell phones, and technology products from value to upper market segments throughout more than 4085 outlets in 32 countries on five continents. TFG will also get Jet’s distribution centre located in Durban and certain stores in Botswana, Lesotho, Namibia and Eswatini. Also part of this fat deal is that the company is looking to also acquire JET Club and all existing JET stock of no less than R800 million.
Johannesburg listed TGF owns Foschini Retail Group which owns the local operations called Foschini Botswana, the acquiring enterprise according to CCA merger notice. “TFG is not controlled by any enterprise/s and for completeness, the three largest shareholders of TFG holding shares greater than 5% as at 27th March 2020 are: Government Employees Pension Fund (16.2%) Public Investment Corporation (13.2%); Old Mutual Limited (6.7%); and Investec Asset Management (6.3%). The remaining issued share capital in TFG is widely held,” said the merger notice.
Only Abdool Rahim Khan is a Motswana in the Foschini Botswana directorship, the rest; Ganeswari Shani Naidoo, Anthony Edward Thunström and Gustav Jansen (alternate director) are South Africans.
According to the CCA merger, the Jet Business is Edcon’s discount department store division, selling clothing, footwear, homeware and some cosmetics as well as cellular products and targets lower-to-middle income consumers throughout Botswana. The Jet Business does not directly or indirectly control any enterprises, says the notice. CCA seeks any stakeholder views for or against the proposed merger, which may be sent within 10 days from date of this publication to the following address.
Botswana Communications Regulatory Authority BOCRA signed a memorandum of Agreement (MoA) with the Ministries of Transport and Communications (MTC), Basic Education (MoBE) as well as Local Government and Rural Development (MLGRD).
The MoA seeks to continue the collaboration that dates back to 2016 when the three parties first agreed to work together in a project aimed at computerizing and providing broadband Internet to primary schools in remote and underserved areas of Botswana.
The project benefitted 68 primary schools and 9 secondary schools through the construction of Local Area Network (LAN) in each primary school, provision of 5 Mbps dedicated broadband Internet to each Primary School and provision of Wi-Fi enabled tablets, laptops and related peripherals such as printers and copiers.
Further, the project will see the augmentation of computers in 9 Junior Secondary Schools with 30 laptops per identified school and employment of Information Technology (IT) officers at each primary school.
When speaking at the signing ceremony in Gaborone, Chief Executive of BOCRA and Chairperson of Universal Access and Service Fund (UASF) Board of Trustees Martin Mokgware said the project’s ultimate goal is to facilitate pupils in schools and host villages to be able to play a meaningful role in the digital economy.
Mokgware indicated that this necessitates upgrading of existing Telecommunications infrastructure to high capacity broadband that will support delivery of education, accessibility to the quality Internet and usage of ICTs.
The Fund began its inaugural programme by sponsoring the provision of WiFi hotspots in public areas around the country as its first project. Following the successful implementation of public WiFi hotspots, the Fund identified Kgalagadi, Ghanzi and Mabutsane areas for mobile network upgrades, schools computerization and internet provision.
Conscious that the project would not be possible without buy-in and support from MoBE, MTC and MLGRD, the Fund facilitated the signing of the first MoU between the three parties in 2016 for implementation of the project.
BOCRA Chief Executive said the signing of this agreement is aimed at benefitting the Kweneng District, adding that they have already assessed the area and have determined that they will be covering 62 underserved villages and 119 schools, 91 of which are primary schools.
“This is a project for which the partner Ministries need to re-commit for its success. Lessons from the previous schools’ computerization and internet connectivity project require that we increase our involvement and resources dedicated to the project for it to be successful. It is my belief as the project coordinator, that we will not do things the way we did them during the first project, for if we do, then we will not have learnt anything,” he said at the signing ceremony.
The purpose of learning is so that there can be continuous improvement to minimize the length of time and amount of resources utilized, he said expressing confidence that their partners will step up to the plate and ensure they play their part in the implementation of the project and that it will progress smoothly having already tread along a similar path.
UASF’s role lies mainly in funding and project management. According to Mokgware, once the project is completed, the work to integrate ICTs into the classroom begins in earnest. Therefore, he said, the project will not succeed without full cooperation and oversight of partners.
“MoBE will put in place the necessary content and ensure that the curriculum is available to all. MLGRD will provide, among others, the enabling environment by ensuring readiness of the school’s infrastructure and necessary security.”