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Debswana Pension Fund bolster property portfolio

Debswana Pension Fund has notified the Competition Authority of its intention to bolster its property portfolio through an increase of its stake in Healthcare Holdings (Pty) Ltd (HCH) and DBN Development Partnership (DBN). The move offers a glimpse into DPF’s investment strategy together with that of Botswana Development Corporation (BDC), with the latter being the seller. DPF has proposed to acquire additional 29.08% shareholding in HCH while the second proposed acquisition is for an additional 33.33% interest in DBN, from NPC Investments which is wholly owned by BDC.

The Debswana Pension Fund (DPF) is the largest private pension fund in Botswana and a major player in the retirement services industry with assets valued at over P6 billion and a total membership of 11 589 inclusive of active, deferred and pensioner members. The DPF is a pension fund secretariat to the Debswana & De Beers family of companies namely; Debswana Diamond Company (Debswana), Diamond Trading Company Botswana (DTCB), De Beers Holding Botswana (DBHB), Morupule Coal Mine (MCM), De Beers Global Sightholder Sales (DBGSS), Anglo Coal Botswana and the DPF itself.

Other than its interest in HCH, DPF’s property portfolio in Botswana boasts of Tala Court, Plot 8842 (Former Barclays House), Carlton House, Debswana House Sitatunga Lodge, both properties in Gaborone. Other properties include Plot 105 in Maun; and Plot 5415 (Teemane Mall) in Jwaneng. Furthermore, DPF has 25% shareholding in Lot 1196 (Engen Maun); 20% in Lot 68 in Palapye; 75% in lot 21928/9 at Francistown; and 33.33% in lot 4933(DBN Partnership) in Gaborone.

In the first transaction, HCH, the target firm, is a property holding company which has healthcare property assets in its portfolio. It owns the property buildings currently occupied by Gaborone Private Hospital as well as the residential property in Gaborone Private Hospital. HCH is directly controlled by Botswana Development Corporation (29.08%), Botswana Insurance Fund Management (29.08%), Debswana Pension Fund (29.08%) and Clinical Developments Botswana (12.77%). In the transaction under consideration, DPF seeks to increase its shareholding by buying out one of the shareholders, Botswana Development Corporation. This will result in DPF having a 58.16% controlling interest in HCH.

The second transaction, DBN, the target entity, is a property development partnership between DPF, Botswana Investment Fund Management (“BIFM”) and NPC. NPC, in turn, is a wholly owned subsidiary of Botswana Development Corporation (“BDC”). BIFM is an asset management company wholly owned by Botswana Insurance Holdings Limited (“BIHL”); whereas NPC is a special purpose vehicle set up by BDC particularly for the purposes of investing in DBN. BDC is a development finance Institution founded to promote and facilitate the development of industrial, commercial, and agricultural enterprises within the framework of the Government of Botswana's plan for economic development.

In 2014, DPF revised its investment strategy to increase domestic property investment exposure to 12.5% of assets over the next 3 years while also developing a strategy to take advantage of local and African investment opportunities. The DPF in its quest to fulfil its investment strategy has found a willing seller in BDC which has also implemented its 5 year strategy that has seen the corporation scaling back on certain investments to focus on high value investments. The Bashi Gaetsaloe led BDC has been disinvesting from businesses that do not fit in with its new strategy, in the process freeing up cash to be used in large scale projects. The proposed acquisitions will likely not face any stiff resistance as none of the parties have a firm control on the property market in Botswana.

According to the latest publicly available DPF’s annual report, for the year ending 2014, the Debswana Pension Fund grew by 10.84% to a total Fund size of P 5,541 billion. Still in the same period, the Fund had 58% of its assets invested offshore with 42% invested locally, with the local assets split between local balanced funds (36%), local property (5%) and private equity (1%). In 2014, the DPF property portfolio returned 20.57% against an IPF Botswana Property index benchmark return of 21.40%. The slight underperformance was driven by the Fund’s high exposure to residential and commercial properties relative to the IPD index. “The Fund also has no exposure to industrial property which is a sector that is yielding high returns.

The income and capital appreciation of the portfolio have remained strong despite challenges with general oversupply in the Gaborone Office sector,” read part of the annual report. While the 2015 annual report is yet to be made public, the latest proposed acquisitions by DPF could signal that 2015 was a good year for them and it reaffirms their continued appetite for local assets, particularly in the lucrative property market.

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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