Who wants to be a millionaire?
Mbongeni Mguni | Friday March 18, 2016 14:35
Sitting left to right, Chandra Chauhan, Gulaam Husain Abdoola, Ramachandran Ottapathu and Colm Patterson.
Not necessarily household names, but personalities so influential that every person in Botswana either buys from them, works for them or owes them.
The four men are, respectively ,at the helm of the Sefalana Group, Turnstar Holdings Limited, Choppies Enterprises and Letshego Holdings Limited, representing four of the biggest homegrown entities on the Botswana Stock Exchange (BSE) and in the general economy.
Securing the quartet’s attendance was a major coup for organisers of the inaugural conference, as last Tuesday was a rare opportunity to see them together publicly and talking about their successes.
Market observers have always believed getting two of the men in particular to share a stage – Chauhan and Ottapathu – would be difficult due to the perceived rivalry between the fast-rising regional retail chains.
The other two men, Abdoola and Patterson generally fly below the radar of public scrutiny, rising to the surface only at results’ announcements, which are part of the BSE’s ongoing obligations for listed companies.
Of the P15.4 billion in investors’ funds that the quartet is responsible for protecting and growing every day, the four men also have vested interests. Chauhan, who has been at the helm of the 42-year-old group since 2003, had 11.3 million shares in Sefalana in 2015, having upped his stake by 22 percent from 2014.
The Zambian-born managing director took Sefalana from a market capitalisation of P64 million in 2004, to its current P3 billion, during which period the group has frequently been the BSE’s top performer.
Abdoola, who has stubbornly built businesses from the ground up, held 92 million linked units in Turnstar in 2015, while Ottapathu, more popularly known as ‘Mr Ram’ held 251.7 million shares in Choppies or about 20 percent of the retail giant, in 2015.
Patterson, Letshego’s chief financial officer, holds just above a million shares in the heavily capitalised microlender, which boasts the furthest reach into Africa, with a footprint of 10 countries.
All four companies came from humble roots, two of them spawned from family-run businesses and the other emerging from difficult, unexceptional beginnings.
Every ear in the packed conference was cocked, attention primed. What followed were extraordinary tales of entrepreneurial resilience, innovation, risk-taking and success. The tales were of how to take a business from the ground of ordinary, past ceilings of doubt and resistance, to the blue sky of success. “We come from an entrepreneurial background and have higher risk capacities,” Abdoola said.
“You need guts to go out and get it done. Don’t let the banks tell you about the risks. The risks should be identified first and assessed to see if they are manageable.
“If 70 percent of the risk can be covered and 30 is not known, don’t let the bank stop you because their own businesses are also risky.
“There are big markets out there waiting for us.” Abdoola knows all about risks. Around the year 2000, he was involved in developing Botswana’s first regional mall, Game City, on virgin territory in Gaborone. Having financed his previous projects through both debt and equity, Abdoola was more familiar with this ‘vanilla’ mode of capital injection. However, as the project advanced towards development, fund and asset managers took an interest.
“The fund managers had certain requirements that I had to consider. It was easier for them to invest in the project if we were listed on the stock exchange, for transparency and compliance.” The process of listing, he remembers, was painful, as it meant moving from being “your own boss” to being answerable to a board, shareholders and regulators.
“You have a board with different directors who may or may not know the business you are in,” he said.
“You fight with them, you get frustrated and you feel maybe they don’t understand the business, but they have a very important role. It’s their role to make sure they look after the interests of all the other shareholders that have invested.
“If you can adjust your mindset and say ‘I have to be accountable and compliant’ then the growth is easier.”
A few years later, the risk-taker in Abdoola again awoke. An opportunity arose in Tanzania for a real estate project with strong growth potential. Quick decisions needed to be made. Risks had to be quickly taken. “When I started the project in Tanzania, I took it to the Turnstar board and told them there was a huge opportunity,” he said.
“They said ‘nope, we’re not interested’. They told me to take the risk and if things worked out, they would then put the project in their portfolio.
“The GH Group developed the project and after two years, we turned it over to Turnstar at a huge profit.” Today, Mlimani City in Dar es Salaam is the Tanzanian capital’s premium retail and office mall and is the first and only indoor fully air-conditioned shopping mall.
Sefalana’s rise was different. The company known today as Sefalana Holdings emerged from an acrimonious dispute over management control involving local and South African shareholders.
Prior to the takeover of control by local shareholders and managers, the group had reached a ceiling. Having been the first company to list on the BSE in 1989, growth had flattened and the direction of future strategic growth was unclear.
“When I took over in 2004, the business was worth about P200 million and not performing well,” Chauhan recalled. “We were not in the retail sector, although we had manufacturing plants that could support this.”
The BSE listing, which even today is 100 free float and 92 percent citizen-owned, supported Chauhan in a launch into retail that turned the group around, from being an initial six store wholesaler and a maize mill in 1974, to today’s 25 cash-and-carry stores, 21 retail supermarket stores, three hyper stores and one convenience store.
Chauhan used rights issues to raise capital for expansions into Zambia and Namibia, where Sefalana is now a household name.
Besides the wholesale and retail sector, Sefalana’s other businesses include property, vehicle dealerships and the sale of agriculture and construction equipment along with the manufacture of grain-based products.
“I do get asked about exiting non-core business,” Chauhan said.
“However, our results over the past 10 to 12 years show that there have been times when one sector has supported us, when others have not done as well.”
Choppies’ humble beginnings from a family-owned store in Lobatse are well documented and continue to be the stuff of dreams. Where South African mega-retail chains stomped to and fro, squeezing out competitors in the local market, Choppies was able to blaze a trail that eventually led to 79 stores in Botswana, 61 in South Africa, 28 in Zimbabwe and 10 planned for Zambia.
“You need to find your niche,” Ram says.
“When we started off, we were a very small company, but we found our niche.
“No one is going to handhold you. You must find your own trajectory and find your own business model based on what your strength is.”
For Letshego, the driver of growth was the introduction of new shareholders who began pushing a pan-African strategy, challenging the thinking at the time and bringing in fresh ideas. “It was the new ideas and a recognition that Botswana is a reasonably small market,” Patterson said. “This pushed us to see where the business could grow. We are proud today that we are in 10 countries and based out of Gaborone.”
In line with Ram’s principle of finding “one’s own business model based on what one’s strength is”, Letshego has taken its tried and tested approach of targetting government employees and the lower income groups, into Africa.
The ‘franchise’ has taken hold in Africa and Letshego now boasts a loan book of more than P6 billion, with strong growth expected to come from a new acquisition in Nigeria.
The quartet on the stage had held their audience captive, imparting nuggets of wisdom for those able to receive and as they left the stage, the unspoken feeling in the room was that it would be a while until a similar opportunity was again offered.