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Resurgent BDC targets P750m investment deals

MBONGENI MGUNI
Driving Seat: Lekaukau says the BDC's assets under management hit a record high PIC: PHATSIMO KAPENG
The Botswana Development Corporation (BDC) plans to spend up to P750 million on various new projects this year, bolstered by resurgent finances and an P800 million loan from the African Development Bank (AfDB), BusinessWeek has learnt.

Five years ago, the state investment company was steeped in losses, mainly the result of high profile investment failures in which an estimated P700 million was lost.

While the 2014-2019 strategic plan ushered in recovery, critics of its early years said divestments from various assets were papering over the Corporation’s real state of affairs and propping up profits.

Last week, a buoyant Moatlhodi Lekaukau, BDC’s acting CEO, delivered a set of numbers on the conclusion of the strategic plan showing that the Corporation broke several records during the period, including building the asset base to P4.8 billion and notching up a cumulative P1 billion in profits.

Lekaukau told a stakeholder briefing that for the year ended June 30, 2019, the BDC’s numbers had been bolstered by steady income from its debt book and more stable performance from its equity investments. The Corporation posted a P198.7 million profit after tax. Lekaukau’s acting chief investment officer, Modise Mokone told BusinessWeek the BDC was eyeing P750 million in investment spending in the current financial year, up from P742 million in the year to June 2019, a figure that was also a record.

The target for the year had been P705 million.  “Our target is more than P750 million and we are well on our way to achieve that,” Mokone said. The BDC, which has spread its reach into the region, plans to pump some of its investment spend into offshore opportunities, as part of the new strategic plan focussing on “high return commercial and strategic projects”.

“In total, the current investment pipeline is around P2 billion (for the next few years) which

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is a bit biased towards regional transactions, but in terms of deployments, it will be somehow balanced,” Mokone said.

The Corporation’s chief financial officer, Benedicta Abosi told BusinessWeek the BDC would continue capital raising activities to support its investment pipeline. She said an eagerly awaited P800 million loan from the AfDB was being finalised with disbursements due soon.

The BDC has had trouble accessing the loan after Parliamentarians, cynical about the Corporation’s previous investment failures, blocked the initial request for the sovereign guarantee required by the AfDB.

 “We have done the terms and conditions of that loan with the AfDB and the first draw down from it is due,” said Abosi.

“We expect the first disbursement from the loan by early January. “We are also still in the market for capital raising.

At the moment our debt to equity ratio is 42% but our target is 100%.” For his part, Lekaukau said while the BDC’s focus locally was on impact projects with returns, offshore it was strictly about commercial returns.

“At home we look at development, outside we just want returns to bring that money home for developments here,” he said.

“When we go global, we want the right returns, US dollar returns to also diversify our revenue.

“The projects outside are strategic to Botswana as well.

For instance, we are not going to build a hospital outside just because; it must have a link to Botswana.  “Anyone who comes to say they want to partner and want funds, we say we want the regional hub of that business in Botswana.”

The BDC’s upcoming local investments include in agriculture, agro-processing and transport.



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