The creation of a behemoth asset manager

The creation of a behemoth asset manager

In less than five years, Kgori Capital Botswana (formerly Afena Capital Botswana) has grown to manage assets of approximately P7 billion. In an interview with Managing Director (MD) BAKANG SERETSE, Staff Writer KEABETSWE NEWEL sees a giant investment firm in the making.

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In less than five years, Kgori Capital Botswana (formerly Afena Capital Botswana) has grown to manage assets of approximately P7 billion. In an interview with Managing Director (MD) BAKANG SERETSE, Staff Writer KEABETSWE NEWEL sees a giant investment firm in the making.

 

Shortly after the company rebrand as Kgori Capital, the now 100 percent Batswana owned company, the company and its directors are now both confident and ambitious enough to expand the service portfolio, specifically to tailor make products for Botswana market. “Under a partnership with our former SA partners, we could not be fully flexible towards Botswana market because Afena was part of an international brand and global investment model,” explained Seretse.

 

 
The company will spread its wings towards what Seretse called Retail Investing and Alternative Investments. He emphasised that Kgori Capital will dive full-force into Private Equity and Infrastructure/Property Asset Management.

 

 
“We want to diversify income and also have a large pool of clients,” Seretse explained, stressing further that clients are looking at alternative investments and where the next growth in investments will come.

 

 
To Seretse, there may be a limitation when investing in equities in Botswana. “Equities are limited, and possibly over-valued, and because of the limitation, there is overconcentration of clients on the same equities, which increases the risk of investment,” the Kgori Capital boss explained. His company’s quest he says is to spread the risk, and increase returns by investing in alternatives. He sees a demand in investing in infrastructure through private companies, which he believes, will also encourage pension money and sovereign money (foreign reserves) to be brought into Botswana and invested here. In his view, to address unemployment and other economic challenges, more money needs to be spent in the local economy to spike activity.
Currently, Kgori Capital portfolio is balanced between local and offshore investments.

 

 
“Investing in property for example, is like a proxy to investing in bonds, returns are almost guaranteed,” he said. Under Retail Investments Kgori Capital will in the near future launch retail investment products targeted at promoting individual investments at a micro-level, which will not only give the individual low-income earners an opportunity to invest and also diversify the class of clients for the firm.

 

 
However, the quest to turn Kgori capital into what it is now has not been a walk in the park. It took dedication from three young financial services professionals, Bakang Seretse, Alphonse Ndzinge and Sharifa Noor who had been working for international asset managing firms, until 2012 when they conceived Afena Capital Botswana.

 

 
Somehow, having worked for companies like Investec as well as the Afena Group in South Africa, the trio gradually got intoxicated by the idea of running a citizen owned asset/investment management firm. After all, they had the experience and the knowhow. It could not be an easy task though, a technical partner with a deeper understanding of the dynamics of investments was needed, at least for a while. That is why Afena Capital Botswana was birthed with 51 percent of its shares held by Afena Capital (PTY) Ltd in South Africa, while the trio held the remaining shares. Seretse said that then, the South African partners had interests in spreading across Africa, which opened a window of opportunity for them to partner here in Botswana.

 

 
Seretse recalls how they started with zero assets under management, despite some capital from partners’ contributions. With only three months in operation, the company according to its MD clinched its first contract from one of the government institutions.

 

 
“To us, it was an opportunity to demonstrate to the market, what we could do as a new entrant,” he said. Seretse believes that at a time when they entered Botswana, there was an opportunity especially to bring products tailored specifically to Botswana.

 

 

When their company commenced, he said the idea was to sell international investments to Botswana. To him, while their assets are biased towards Botswana, there were always some limitations which prompted the company to look to South Africa, a country that has a similar monetary policy to Botswana. The Botswana Pula is also heavily weighted towards the SA Rand given that the country is Botswana’s biggest trading partner.

 

 

“We wanted to develop Botswana in the long term by courting and investing in unlisted companies to enhance their growth in the capital market,” he pronounced. To him, the company’s model was in going beyond investment, it was a partnership with government and other institutions to bring forth social investments and address unemployment, access to capital and stimulating economic activity could be achieved. However, all this began at a time when Kgori (then Afena) has zero clients, with a very lean team as well because of budgetary constraints.

 

 
With each client, the company grew, employed more people to boost efficiency, but most importantly, the three Batswana founders gained more experience, exposure and became more ambitious towards a company fully controlled by Batswana to easily advance interests of Botswana.

 

 
Seretse confirms that up to last year, the company grew significantly to assets close to P7 billion, and prospects for growth were also bright. It was then that Seretse, Ndzinge and Noor opened negotiations with the foreign partners to buy them out.
“It was a difficult negotiation because the company value was on the rise, and prospects were good,” he added, saying that they paid a good price for their stake.

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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.