Fund managers eye BPOPF bonanza

Fund managers eye BPOPF bonanza

This publication has learned that already, a bare knuckle fight between local asset and fund management companies has ensued behind the scenes, with these fund managers vying for the lucrative contract.

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•  Tussle begins for BPOPFs P4 billion contract
• Fleming loss propels other fund managers to action
• Afena Capital front-runners

 

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Local investment management firm Afena Capital could emerge the biggest winner in Botswana Public Officers Pension Fund (BPOPF)’s P4 billion contracts which went up for grabs after the fund terminated its deal with Fleming Asset Management (Pty) Ltd, The Business Weekly & Review has established.

 
This publication  has learned that already, a bare knuckle fight between local asset and fund management companies has ensued behind the scenes, with these fund managers vying for the lucrative contract.

 

although several players in the investment management industry are vying for the contract and could actually be considered, Afena Capital seems to have advantages

 

The fund managers have been watching in anticipation. Last week Friday, the news broke; BPOPF had terminated Fleming. It meant that the P4 billion worth of contracts would be allocated to another fund manager.

 

Inside sources tell The Business Weekly & Review that although several players in the investment management industry are vying for the contract and could actually be considered, Afena Capital seems to have advantages.

 

AFENA CAPITAL
This is basically a company controlled by three local shareholders who are also part of the executive management. It was established in 2012 through a 55/45 percent joint venture between its SA shareholders and Batswana citizen management team which comprised its Managing Director  Bakang Seretse, Alphonse Ndzinge (Chief Investment Officer) and Sharifa Noor  (Chief Operations Officer ).

 

These three Batswana shareholders at Afena Capital Botswana are in the process of acquiring an extra 51 percent shareholding currently held by South African shareholders through Afena Capital (Pty) Limited, to ultimately own all shares in the company.

 

BPOPF prefers to allocate mandates to companies that promote citizen empowerment

 

As it stands, Afena Capital Botswana is owned 51 percent by the South African side, 42 percent is owned by the three Botswana shareholders while 7 percent is held by Afena Capital Botswana Staff Share Trust.

 

The restructuring, which will leave Afena Capital Botswana wholly owned by Batswana citizens, will work wonders for the company, according to industry insiders. It is an open secret that fund management companies in Botswana are targeted to manage BPOPF money.

 

The money, however, comes with some conditions.  BPOPF prefers to allocate mandates to companies that promote citizen empowerment. There has been a 25-percent threshold for local shareholding in companies that would be given the BPOPF money to manage.

 

This is because most of the fund and asset management companies here are foreign owned, mostly an extension of South African companies. Even when it began operations in 2012, having been owned locally by over 40 percent, Afena Capital qualified for the BPOPF funds. Last year, BPOPF awarded Bakang Seretse and his company P1 billion to manage, which was the company’s entrance into BPOPF’s portfolio.

 

The allocation came after BPOPF controversially terminated P9 billion worth of contracts awarded to the Botswana Insurance Fund Management (BIFM). Because of the ongoing restructuring, Afena Capital will be the only asset management firm owned wholly by Batswana, which according to BPOPF policy and practice would be the most suitable to manage funds on behalf of BPOPF.

 

Also being a newcomer in the market, Afena Capital manages a small portion of the BPOPF money, as compared to other companies which have been managing the fund for years, which has also grown in value.

 

Afena Capital Botswana commenced operations in 2012

 

It gives BPOPF an allowance to allocate more funds to Afena Capital without over exposure to one asset management company. Afena has not managed a lot of mandates for BPOPF, which also means that its limited history with the fund has not exposed its weaknesses and strengths, giving the upstart a clean reputation for now, unlike other companies which have had their share of fallouts with the golden fund.

 

Industry players say that initially the local managers, also shareholders, partnered with Afena Capital (Pty) Ltd in SA to get a boost through a well-established brand in the investment management industry.

 

However, after Afena Capital Botswana commenced operations in 2012, the company hit the ground running, attracting good deals within a short period of time, which sources say comes as a way of winning trust because of the ability to effectively manage investments.

 

AFRICAN ALLIANCE
It is one of the latest beneficiaries of the BPOPF money after it gobbled up P4 billion last year following the termination of BIFM’s contract. Although it has strong South African links, African Alliance has some citizen investors within its fold.

 

It was previously led by former permanent secretary in the Ministry of Finance and Development Planning Serwalo Tumelo who owns around 30 percent together with Morago Ngidi, Tally Tshekiso and fomer CEO Don Gaetsaloe.

 

according to insiders, also stands a chance to be allocated additional funds from the BPOPF

 

The late Louis Nchindo was very instrumental in the acquisition of the then 30 percent stake in African Alliance, which was at the time the first financial services outfit to be licensed by the International Financial Services Centre (IFSC) Botswana, after being invited by this consortium of citizen investors.

 

African Alliance has been around for some time now, with some scuffles with the BPOPF along the way, but all that seems to have been water under the bridge when the investment management firm was allocated P4 billion under the stewardship of Don Gaetsaloe who has since left the firm. The company, according to insiders, also stands a chance to be allocated additional funds from the BPOPF.

 

INVESTEC
Investec Botswana is part of the global Investec brand. The company also manages over P5 billion on behalf of the BPOPF. The company that is controversy-free. It has managed to remain low-profile, maintain a good relationship with the big fund while enjoying lucrative contracts at the same time.

 

CAPITAL MANAGEMENT
BOTSWANA (CMB)
The first tranche (P500) of BPOPF’s newly introduced P800 million property fund was awarded to Capital Management Botswana (CMB), a company formerly called Capital Management Africa (CMA).

 

The company was formed by Tim Marsland and Rhys Carr after the two, who were previously in partnership with Botswana Insurance Holdings Limited (BIHL) in BIFM Capital Fund 1, had a fallout with the former.

 

CMB is one of the companies that stand a good chance

 

The two then formed CMB which was to manage investments regionally and independently. Despite the two having had a bad history, and were sued successfully by Botswana Building Society (BBS), it did not stop BPOPF awarding the controversial investors P500 million to manage. CMB announced that it had plans to establish a P2 billion equity fund to service regional companies.

 

CMB remains a contestant for the allocation of BPOPF’s remaining P300 million of the P800 million properties fund. Insiders say that nothing stops BPOPF from allocating a further mandate to CMB, but they also quip that the company might not be given any additional massive funds to manage. CMB is one of the companies that stand a good chance  and stands in attention for a piece of the action, especially private equity funds.

 

THE CONDEMNED MANAGERS
While a number of fund managers are fancying their chances, there are those who have obviously fallen out with the big fund whose chances are totally quashed, for now, according to insiders.

 

BIFM
In 2012, Botswana Insurance Fund Management (BIFM), under the stewardship of the then chief executive officer (CEO) Tiny Kgatlwane, lost P9 billion worth of contracts which BPOPF terminated mysteriously. No reasons whatsoever were advanced by the big fund.

 

There is, however controversy between BPOPF and Botswana Insurance Holdings Limited (BIHL) which owns 100 percent in BIFM. To start with, BPOPF is a major shareholder in BIHL, with just over 20 percent, yet it terminated a contract in a company it indirectly owns.

 

BIFM currently manages just around P2 billion on behalf of BPOPF

 

BIFM, through its holding company, is owned 58 percent by the South African investment management firm, Sanlam. Apparently, decisions taken by BIHL management were controlled from Cape Town while BPOPF advocated for independent decision making.

 

BIFM currently manages just around P2 billion on behalf of BPOPF and insiders say BIFM may not get any major deal from BPOPF in the short term.

 

FLEMING ASSET MANAGEMENT
Under the stewardship of Peter van-Riet Lowe, Fleming lost a contract worth over P4 billion from the BPOPF last week. Van-Riet-Lowe is alleged to have been engaged in illicit financial transactions, while recently the fund had further complaints about the P300-million Hilton Hotel project funded by the BPOPF and managed by the firm.

 

BPOPF has since terminated all its contracts with Fleming and Van-Riet-Lowe has since been forced into  ‘sanctioned’ leave by the Fleming Board of Directors. In the wake of all these, Fleming seems to be stuck out in the cold for the foreseeable future. It is reported that BPOPF funds were worth over 50 percent of Fleming’s portfolio.

 

VENTURE PARTNERS BOTSWANA (VPB)
A company solely owned by Anthony Siwawa,who recently was engulfed in the bankruptcy scandal of the fast food outlets KFC. VPB has a chequered history. It was given P200 in a venture capital fund by Citizen Enterprenual Development Agency (CEDA).

 

VPB has been eying the P300-million contract from BPOPF

 

Ten years down the line, a major portion of the companies which Siwawa had invested in had been liquidated. These include Delta |Dairies, PG Industries and many others. Both CEDA and VPB are yet to account for the P200 million a matter that has drawn the attention of the decision makers at the BPOPF.

 

Most recently, another company owned by Siwawa, VPB Propco, ran the KFC Botswana franchise into debts exceeding P110 million leading to liquidation. VPB has been eying the P300-million contract from BPOPF, which is the second tranche of the P800 million property fund. Those in the know say that the KFC scandal may have squashed VPB’s chances at the BPOPF.

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In his generation Newel is one of the most recognisable names in Business journalism. A recent finalist in Media Institute of Southern Africa Media Awards, Newel has written extensively in the boardroom dynamics around public pension funds and related investment interests. His areas of interest are companies and markets, including the financial reports of major companies in the country. Currently he is pursuing the developments around the management contracts for one of Africa’s most lucrative Public Pension Fund, the Botswana Public Officers Public Funds.