Sefalana enters Lesotho
Sefalana Holding Company Limited (Sefalana), on the of the leading retail stores in Botswana, has concluded a deal that will see the company operating for the first time in Lesotho.
The deal comes after months of negotiations that have resulted with Sefalana acquiring a large cash and carry store in Lesotho.
“It was previously reported to the Shareholders of Sefalana Holding Company Limited that the Company has entered into negotiations with two unrelated third parties in the Region, which if successfully concluded, and subject to relevant regulatory approval, will result in a transaction that might have an impact on the price of the Company’s shares.
In respect of the first transaction, Shareholders are advised that the Company has entered into an agreement to purchase a large cash and carry going concern in Maseru, Lesotho on 1 November 2016. This will enable the Group to enter into the Lesotho market in line with its expansion plans into the Region,” wrote Mr. Mohamed Osman, the Group’s Finance Director, in a note to shareholders.
The latest communication forms a series of announcements that the company has been releasing all centred around the company raising capital by way of rights of issue. Earlier this month, the retail giant, released a communiqué that it intends on raising capital by issuing more shares which will be offered to existing shareholders in proportion to their holding of shares. The second announcement which carried more information than the previous one revealed that The Company is raising approximately P351 Million, net of expenses, by way of a rights issue of 27,858,523 Offer Shares.
The Offer Shares are being offered by way of a Rights Issue to shareholders on the basis of 1 offer share at P12.60 for every 8 shares held. While the previous announcements did not reveal the specific reasons why Sefalana was raising capital, the recent press release confirms that the money is intended for financing the deal in Lesotho. “A Rights Issue program is underway to raise funds for this transaction. Details of this program have been published and further details will follow in due course,” Mr. Osman said.
The company’s entrance in Lesotho is a confirmation of Sefalana’s growing confidence about its regional expansion plans after its first major retail expansion in Namibia was a success. The Lesotho acquisition has the hallmarks of how Sefalana entered the Namibian market and indications are it will play from the same rule book. In 2013, the company opened its first store in Namibia then a year later, Sefalana swept in and acquired 12 metro stores across Namibia. Metro Namibia contributed 29% and 10% of the Group’s revenue and profit before tax for the year, respectively. Turnover amounted to just under P1.1 billion which was 35% up on the prior year. Profit before tax amounted to P20.0 million which was 87% up on the prior year.
Sefalana is one of the oldest companies trading on the stock exchange, first making contact with the stock exchange in 1975 and has since evolved into the behemoth that is today. The year 1987 brought with it the localization of shareholding allowing the group to be in the hands of citizens, information shows that 92% of Sefalana shares are held by Batswana. The most significant Shareholders are some of the largest Pension Funds of Botswana such as the Botswana Public Officers’ Fund (BPOPF) and the Debswana Pension Fund.
The other significant shareholder is Motor Vehicle accident Fund. Whilst the group’s core business is in the FMCG sector, the Group remains well diversified with a solid property portfolio in Botswana, Zambia and Namibia, 3 motor dealerships (MAN, TATA and Honda), agencies for the sale of industrial and agricultural equipment, a well-established grain mill in Serowe, providing nutritious meals for the country’s population and a UHT milk plant, which commenced operations this year.
The group has achieved significant growth in the last 4 years with revenue doubling from P1.9 billion in 2012 to P3.8 billion in the current year. An annual growth of 10.4% has been achieved compared to the prior year. Over the last 4 years, profitability has almost doubled, from P109 million in 2012 to P207 million in 2016, an impressive growth rate of 90%. At a current share price of P14 per share, this represents a 409% growth over 5 years when the price was P2.75.
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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.
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.
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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