Following the decision by the Botswana Public Officers Pension Fund (BPOPF) to move some of its services in-house and terminate the Alexandra Forbes administrative functions’ contract, Botswana’s richest fund and arguably one of the wealthiest institutions in the land is set to bolster its wealth accumulation and asset expansion business.
Speaking to their 5 year strategy set to commence next year January, the BPOPF Chief Executive Officer (CEO), Boitumelo Molefhe indicated that by the end of the 5 years in 2022, the Fund’s treasury in assets worth, will be sitting at a whopping 90 billion pula.
Speaking at a press briefing recently, Molefhe said BPOPF will to do so simultaneously empowering Batswana to venture into the asset management business. She said her organization will play its part by awarding new contracts to asset managers that have at least 25% citizen ownership, and 50% locals’ representation in their Boards, and having a minimum of 70 % Batswana in their company executive management.
Molefhe who is a former Finance Chief at Debswana Pension Fund observed that the new guidelines are just the starting point for more citizen empowerment initiatives in the lucrative capital assets and fund management industry. She added that they will review the guidelines from time to time in order to give citizen owned firms more share in the business.
“The 25% is just the starting point, going forward the plan is to continuously review the threshold upwards. The intention is not to leave anyone out but to empower citizens. We have a lot of talented citizens that are doing most of the work for fund managers but are not appropriately remunerated,” she said.
Molefhe explained that they are not just about the talk, emphasizing that there will be a clear compliance framework to ensure robust implementation of these guidelines. “As for the fund managers already mandated with our assets, they will have to comply and meet our new guidelines, if at all they desire to be reengaged because most of their contracts end around February 2018,” she said.
BPOPF is of the view that their assets and capital should be managed by locals as the wealth is generated locally from Batswana public servants. “We cannot have most of the profits from our fund being taken outside the country, if a newly mandated fund manager doesn’t comply in the first year, we will reduce the size of their mandate by 10% and if non-compliance stretches to the second year, then BPOPF will withdraw the mandate totally,” she said.
BPOPF currently does millions worth of business with BIFM, Investec, African Alliance just to mention but a few. The inspiration that Batswana can bite big in the capital asset management business comes from Afena Capital, one of BPOPF mandated fund managers taking care of millions worth of assets and is 100 % owned by Batswana.
In addition, BPOPF revealed that they have half a billion pula ready to finance local asset management startups. “We are willing to inject 500 million pula to finance this bid to see more citizens venture into the capital investment management industry, we will also incubate these businesses to see them through until full establishment as they service back our loans,” Molefhe explained.
She added that they will do so by handholding fledging firms that have less than a billion pula asset management mandate, only those with 100% citizen ownership and at least 50 % locals in senior management. “The incubation is open to all asset classes and we want the businesses to eventually stand on their own and compete in the big league while also transferring skills to locals,” she added.
THE FIVE YEAR STRATEGY
Unpacking the 5 years strategy of which the new guidelines will apply to, Molefhe explained that their asset base has grown from P51 billion in 2015 to P55 billion today. However she noted that although the Fund asset value grew to P55 billion, total returns for its active and deferred members fell to 4.25% from 13.73% in the previous year due to the volatility in both the domestic and global markets. Currently BPOPF has 58% of its portfolio invested offshore.
“We will invest more in private equity and other asset classes such as infrastructure and property to diversify our portfolio amid low growth in the stock and bonds markets,” she said. According to Molefhe, the BPOPF has also appointed a German company, Monrovia Capital as its new private equity fund manager, effective January 2017.
BPOPF is the largest in Botswana housing over 150 000 members and have over 23 billion pula asset worth in Botswana. One of the Fund’s traditional cash spinning investments includes local mobile network giant, Mascom Wireless. BPOPF is the single largest institutional investor on the Botswana Stock Exchange (BSE) owning a significant stake in 19 of the 22 companies listed on Thapelo Tsheole’s P48 billion domestic stock market.
The Fund further owns 16 % of stake in Barclays Botswana, around 25 percent in Botswana Insurance Holdings Limited (BIHL), the diversified financial services firm which has a major stake in other major companies such as the titanic micro-lender, Letshego Holdings Limited and Funeral Services Group (FSG).
Furthermore, Molefhe’s investment drive saw BPOPF recently acquiring shares worth P21 million in tourism company, Wilderness Safaris. The Fund also has a 23 percent stake in Chobe Holdings, another travel and tours operator. The two are the largest and only listed safari services firms. BPOPF owns around 12 percent in the regional fast growing supermarket group, Choppies Enterprises.
As if it is not enough, BPOPF also owns a significant stake in listed petroleum services firm Engen Botswana, at 13.7 percent, First National Bank Botswana (FNBB) is the largest company trading on the BSE, BPOPF owns 13.4 percent of Steven Bogatsu’s 8.8 billion pula chunk. BPOPF also owns 10 percent in the security services giant, G4S, and a further 9 % in industrial property company, Letlole La Rona (LLR).
One of the biggest companies on the BSE, Letshego, also a pan-African micro-finance firm is 23 percent owned by BPOPF directly. â€¨BPOPF investments are endless, for instance in the New African Properties (NAP), a company that owns the classic Riverwalk Mall in Gaborone, BPOPF owns over 167 million shares. It further has a 17 percent stake in another property firm, Prime Time Holdings, as well as RDC Properties at 8.13 percent.
In Sechaba Breweries Holdings, the brewers of St Louis Lager, BPOPF owns 22 percent. The fund has a controlling stake in Sefalana, Choppies’ largest competitor, at 33 percent. It has 8.6 percent in Standard Chartered Bank Botswana and around 30 percent in Turnstar, the owners of Game City and Mlimani City malls.
A number of lucrative investment under property portfolio also includes the 300 million pula injected in Central Business Department(CBD) to erect the Hilton Garden Inn Hotel and the purchase of two strategic properties at the fast growing second city, Francistown from Prime Time Properties at tune of P71 million. BPOPF property investment is worth over P1.5 billion including other transactions, of which the mandate is being handled by asset manager, Messidor.
BPOPF Chief Executive Molefhe however expresses worry over their BSE Investment which she observed to be trading southwards since the beginning of the year. Under the new guidelines commenced and encored on Molefhe’s vision 2022, BPOPF will introduce initiatives to encourage skills transfer, local procurement of goods and services such as back office services like performance reports, accounting and compliance, and HR services.
“We have seen instances where the feedback reports we get from our fund managers are complied outside the country including other back office functions such as accounting. We need such services to be done here in Botswana so that skills are transferred to locals,” she said.
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.