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FPC to list after successful IPO

Mr Chandra Chauhan; Group MD, Sefalana group

The FAR Property Company (FPC) has announced its Initial Public Offering (IPO) results for its imminent listing on the Botswana Stock Exchange (BSE) that will see a total of 380 million linked units listed on the main domestic counter of the BSE. For the public offer, 40 million subscription linked units were issued for the IPO and private placement. The 20 million linked units available to the members of the public had a 1.2 oversubscription. There were 646 applicants for 24 035 700 linked units for the offer price of P2.57.

The remaining 20 million linked units will be allotted and issued to institutional investors in a private placement. The 40 million units sold are an addition to the other 40 million linked units that are to be sold by the founders immediately after listing.

“Applications for 4 035 700 linked units were received from members of the public. Applications for 20 000 000 linked units were received from institutional investors. Members of the public will be allotted linked units equal to their applications, i.e. will receive the number of linked units applied for in full. The institutional investors are allotted 15 964 300 linked units, allotted amongst them, in proportion to their applications,” read part of the press release.

FPC is expected to list on the 4th of May, joining the other 5 existing property companies and bringing the total number of listed companies on the main board to 22. Furthermore, FPC with its issued 380 million units at an offer price will debut with a market capitalisation P976.6 million, making it the 3rd most valuable listed property company on the BSE.

The founders of FPC have now become legends in successfully listing companies; their maiden listing was a resounding success as they listed Choppies, first in the BSE and subsequently in the Johannesburg Stock Exchange. In this listing, the founders are looking at a windfall of about P102 million while the company will also pocket the same. The reason for listing the company was to raise funds for ongoing projects and other future projects.

Prior to the IPO, FPC had 340 million linked units with founders Ramachandran Ottapathu and Farouk Ismail each holding 170 million linked units. In preparation for the listing, 40 million new units were issued bringing the total number of linked units to 380 million. From the newly added 40 million units, an offer was made to the public to apply for 20 million linked units, while the other 20 million linked units was for private placement. The issued 40 million units will raise in excess of P100 million for the Company and a concurrent sale by the existing shareholders of the Company of 40 000 000 linked units to realise approximately P100 million for the sellers.

According to the company prospectus, the founders have sold, subject to the result of the IPO, 40 million linked units to selected institutional investors at the offer price per linked unit. During the book building stages, 40 million linked units were offered for sale by the founders and the 40 million subscription linked units offered for subscription by the company i.e. a total of 80 million linked units were offered to the placees. Linked units in excess of 95 million were taken up, representing an oversubscription of 20%. The oversubscription was a signal that there was demand for FPC’s linked units, prompting the company to have a public offer constituting of the IPO and private placement.

Following the IPO, the listing, and the subsequent sale of units by the founders, as set out in the prospectus, the issued units of the Company will be held as follows: Ramachandran Ottapathu and Farouk Ismail as the founders will now hold 79% of the company as each man holds 150 million linked units, representing 39.5% for each founder. The public will now hold 20.7% which represents 78 981 500 linked units, while directors and their associates lay claim to 0.2% which is 768 500 units and the last 0.1% representing 250 000 units is held by associates of Ramachandran Ottapathu.

The FAR Property Company was founded in 2010 to accommodate the Choppies Group needs as the retail giant was in need of properties to rent during its exponential growth and expansion era. The company then began its string of property acquisitions, in the process the company has acquired 182 properties in Botswana and has acquired 23 properties in South Africa. Although, the initial plan was for the properties to serve the needs of Choppies group, the development of the Choppies brand and market position in Botswana attracted the public to premises occupied by a Choppies outlet.

This led to demand by other providers of consumer services to seek accommodation for their outlets at the location of Choppies outlets. The Company became less reliant on the Choppies Group for take up of space in its properties, and the size and nature of the properties changed. The company’s property portfolio has grown over the past 6 years; by 2015 the company had P1.3 billion assets, and the company brought in P92 million in revenues in 2015.

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Dark days as Aviation industry collapses

22nd November 2020
Air Botswana

As the Aviation industry takes a COVID-19 pummeling, for Africa the numbers are staggering, Chief Executive Officer of the International Air Transport Association (IATA), Alexandre de Juniac has observed.

Speaking recently at the African Airlines Association (AFRAA) has been hosting an Annual General Assembly, de Juniac said traffic is down 89% and revenue loses are expected to reach $6 billion. And this figure is likely to be revised downwards in the next forecast to be released later this month. “But the impact is much broader. The consequences of the breakdown in connectivity are severe,” he surmised.

According to de Juniac, five million African livelihoods are at risk while aviation-supported GDP could fall by as much as $37 billion. That’s a 58% fall.

“We have a health crisis. And it is evolving into a jobs and economic disaster. Fixing it is beyond the scope of what the industry can do by itself.”

He said they need governments to act, “And act fast to prevent a calamity.”

“We are in the middle of the biggest crisis our industry has ever faced. As leaders of Africa’s aviation industry, you know that firsthand. Airline revenues have collapsed. Fleets are grounded. And you are taking extreme actions just to survive. We all support efforts to contain the COVID-19 pandemic.  It is our duty and we will prevail. But policymakers must know that this has come at a great cost to jobs, individual freedoms and entire economies,” he said.

de Juniac used the AFRA general assembly platform to amplify IATA’s call for governments to address two top priorities: “The first is unblocking committed financial relief. Airlines will go bust without it. Already four African carriers have ceased operations and two are in administration. Without financial relief, many others will follow.”

Over US$31 billion in financial support has been pledged by African governments, international finance bodies and other institutions, including the African Development Bank, the African Union and the International Monetary Fund.

Unfortunately de Juniac pointed out, in his words, “Pledges do not pay the bills. And little of this funding has materialized. And let me emphasize that, while we are calling for relief for aviation, this is an investment in the future of the continent. It will need financially viable airlines to support the economic recovery from COVID-19.”

The second priority, according to IATA is to safely re-open borders using testing and without quarantines.

“People have not lost their desire to travel. Border closures and travel restrictions make it effectively impossible. Forty-four countries in Africa have opened their borders to regional and international air travel. In 20 of these countries, passengers are still subject to a mandatory 14-day quarantine. Who would travel under such conditions?” de Juniac quizzed rhetorically.

He suggested that countries should adopt systematic testing before departure provides a safe alternative to quarantine and a solution to stop the economic and social devastation being caused by COVID-19.

He admitted that it’s a frightening time for everyone, not least the millions of people whose livelihoods depend on a functioning airline industry. Right now, de Juniac said there essentially is no airline industry. He cited the example that China’s largest airlines sound optimistic, but in a vague way. “They gave no hard data about current yields, loads, or forward bookings, discussing only developments in 2019. Boy, does that seem like ages ago.”

Aviation’s darkest days

The IATA CEO said these are the darkest days in aviation’s history. “But as leaders of this great industry I know that you will share with me continued confidence in the future.

Our customers want to fly. They desire the exploration that aviation enables. They need to do international business that aviation facilitates. And they long to reunite with family and loved ones.”

He said the industry will, no doubt, be changed by this crisis, but flying will return. “Airlines will be back in the skies. The resilience of our industry has been proven many times. We will rise again,” he said.

de Juniac said Aviation is a business of freedom. “For Africa that is the freedom to develop and thrive. And that is not something people on this continent will forget or lose their desire for.”

 

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Inflation increased to 2.2% in October 2020

22nd November 2020

Headline inflation increased from 1.8 percent in September to 2.2 percent in October 2020, but remained below the lower bound of the Bank’s medium-term objective range of 3 – 6 percent, and lower than the 2.4 percent in October 2019.

According to Statistics Botswana, the increase in inflation between September and October 2020 mainly reflects the upward adjustment in domestic fuel prices {Transport (from -3.9 to -2.5 percent)}, which is estimated to have increased inflation by approximately 0.29 percentage points.

“There was also a rise in the annual price increase for most categories of goods and services: Alcoholic Beverages and Tobacco (from 6.2 to 6.6 percent); Clothing and Footwear (from 2.5 to 2.7 percent); Communications (from 0.6 to 0.9 percent); Housing, Water, Electricity, Gas and Other Fuels (from 6.4 to 6.6 percent); Recreation and Culture (from 0 to 0.2 percent); Miscellaneous Goods and Services (from 0.7 to 0.9 percent); Food & Non-Alcoholic Beverages (from 4.2 to 4.3 percent); and Furnishing, Household Equipment and Routine Maintenance (from 2 to 2.1 percent). Inflation remained stable for: Education (4.7 percent); Restaurants and Hotels (3 percent); and Health (1.5 percent). Similarly, the 16 percent trimmed mean inflation and inflation excluding administered prices rose from 1.8 percent and 3.1 percent to 2.2 percent and 3.4 percent, respectively, in the same period.”

[Source: Bank of Botswana]

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BDC injects further P64 million into Kromberg & Schubert

22nd November 2020
BDC

Botswana Development Corporation (BDC) has to date pumped a total of P100 million into the expansion of Kromberg and Schubert, a car harnessing manufacturing company, operating from Gaborone Old Naledi.

At the official ground breaking ceremony of the company‘s new warehouse today, BDC Managing Director, Cross Kgosidiile revealed the wholly state owned investment corporation has pumped P64 million into the expansion which entailed building of the new warehouse.

Kgosidiile explained that this follows another expansion project which was successfully launched in 2017, in which BDC invested P36 million, bringing the total investment into Kromberg at P100 million. The MD also acknowledged Botswana Investment and Trade Centre (BITC) as a partner in the project and for having facilitated the acquisition of the land.

 

Giving a keynote address, Minister of Investment, Trade & Industry, Peggy Serame highlighted the importance of infrastructural development in growing the local manufacturing sector and transforming the economy of Botswana.

Serame underscored the value of strategic partnerships between Government and the private sector, noting that when the two work together and pull together in one direction results will be evident and jobs will be created.

“With the prevailing conditions of depressed economy occasioned by COVID-19 pandemic, government is reliant on entities like BDC to bring in revenue and acceleration of private sector development in line with its mandate and strategic plan. This plan is supported by the need to invest in growth sectors and accelerate the implementation of the Economic Diversification Drive,” Serame said.

Minister Serame noted that the partnership between BDC and Kromberg & Schubert begun in 2017 when the P36 million, 4100 square metres factory expansion for the company was launched.

 

She said the launch of the 7320 square meters factory expansion, to be built at the tune of P64 million signals the continuation of the good partnership between the two companies.

 

“I must commend BDC for their continuous efforts to build partnerships with the private sector geared towards contributing to economic development of this country.”

 

Minister Serame also added that BITC through its robust investor aftercare programme continues to provide value added and red carpet to Kromberg and Schubert under their One Stop Service Centre.

 

“In this regard BITC facilitated acquisition of land to enable this expansion. I therefore would like to commend BITC for their timely facilitation to make this expansion possible,” the minister said.

 

Kromberg & Schubert was incorporated in Botswana in 2009; The Company has grown to asset its position as a significant player in the regional automotive industry value chain.

 

The company is also a critical player in the economic development of Botswana, it currently employs 2100 Batswana across its operations. Kromberg exports on average P2.0 billion worth of goods annually, contributing significantly to foreign exchange.

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