Ninety One eyes P2bn in private credit opportunities
Mbongeni Mguni | Monday September 8, 2025 10:22
The local financial market has been weighed down by a liquidity crisis since last year, mainly owing to reduced government spending amidst the prolonged downturn in diamonds.
Private credit, meanwhile, which involves non-bank entities such as pension funds and their asset managers lending money to companies as opposed to traditional bank credit, is a growing alternative in the country.
“We're seeing that real opportunities already exist within the market,” Ninety One analyst, Mbaki Wotho, told a panel discussion last week. “These exist across a diverse number of sectors and fields, whether it's healthcare, infrastructure, financial services, or others. “And these have come at attractive yields and ticket sizes ranging from about P100 million to P1 billion.”
He added: “In terms of the pipeline, I'd say over the next two to three years, we have the capability to deploy between P1 billion and P2 billion into very good quality names.”
Ninety One Botswana’s assets under management are just shy of P13 billion and the firm is invested across various asset classes.
Wotho said the liquidity shortage in the traditional markets was causing borrowers to look for alternative sources of funding, as commercial banks were in many cases unable to accommodate some of the companies’ needs.
“This puts alternative bankers, such as private credit, in a strong position. “In terms of the risks that you see, in an environment such as this, with headwinds such as a contracting growth environment, you need to look for businesses that are resilient and opportunities that are resilient. “That's why we like infrastructure, because infrastructure has predictable cash flows,” he said.
Wotho explained that typically, opportunities in infrastructure are inflation-linked and often carry implicit or explicit government support.
“Typically, in an infrastructure project, you will have some of your revenue being linked to inflation, which provides some buffer so that you can have an adjustment in terms of the revenue that the projects will be earning. “In addition, these projects tend to have either implicit or explicit sovereign support, for example, in the renewable energy space, where we have seen a lot of development in that over the past two years,” he said.
Wotho added that as an asset manager, Ninety One would carefully assess any opportunities that present themselves, within the limits of the mandate provided by the investors in the funds.
He said private credit comes in as both a solution to the liquidity challenges that the nation is facing, as well as an opportunity for investors such as pension funds.
“One thing that private credit adds to pension funds, beyond the diversification, is that it is self-liberating in the sense that as coupons are being paid, that creates liquidity for the funds. “So, there's liquidity that is received through coupon payments, whether they're totally semi-annual or annual. “There's also liquidity that's created through principal payments as the facility is being run down and that's how we're able to then provide a return to the asset owners, being the pension funds,” he said.
Ninety One head of investments, Alphonse Ndzinge, said the past year had been challenging, with the downturn in diamonds weighing on the economy and requiring the asset manager to exercise greater caution and selection in its investment decisions. He said Ninety One expected the economy this year to contract by between 0.5 percent and one percent, although there were emerging signs of recovery in diamonds.
“There are signs of a little bit of recovery with the recent (diamond) sight sales and export numbers looking a bit encouraging,” he said. “We don’t know if that’s frontloading for tariffs or inventory clearances and we are still watching that quite closely. “However, we are still expecting a modest contraction.”