BDC offloads more properties
Brian Benza | Tuesday May 24, 2016 18:00
In two separate deals with related party, Letlole Larona, BDC is selling residential properties in Gaborone’s leafy suburb of Extension 11 for a consideration of P42 million while a deal for a stake in property in Francistown is also being finalised for P34.6 million.
In a notice, Botswana Stock Exchange (BSE) listed Letlole said the two deals, which are still subject to regulatory and shareholders approval, will boost its balance sheet by P92 million to P779 million, post the transactions.
As part of the deal BDC, which holds 66 percent shareholding in Letlole, has also agreed to advance upto P200 million in loans to the property company, which will be used to fund the acquisitions as well as refinance an overdraft facility with a local commercial bank.
“The opportunities presented by the acquisitions is attractive as it provides growth opportunities and enhances return on equity for the company,” stated Letlole.
The Gaborone properties include 42 units of residential flats currently owned by BDC’s 100 percent-owned subsidiary, Residential Holdings.
The Francistown property, which is valued at P104 million, is currently equally owned by BDC, BIFM and Northern Investments.
After the transaction, Letlole will own BDC’s one-third participatory interest.
As part of its restructuring, BDC has been divesting from direct ownership in ‘mature sectors’ such as properties to invest in new industries.
In 2014, the corporation embarked on an exercise to review its business portfolio, which aims at divesting from approximately 12 percent of its current portfolio of projects and shed assets that do not necessarily fit into the new strategy.
Recently, properties that the BDC has divested from include Toro Lodge, Khawa Lodge and Cumberland Hotel. Industries targeted under the strategy include large scale investments of not less that P30 million in sectors such as energy, in particular solar power plants, manufacturing, agriculture and other infrastructure projects. In terms of funding, the African Development Bank last month approved a P850 million line of credit to BDC to be invested in key sectors with a view to ultimately help diversify the country’s economic base.
The government will provide a sovereign guarantee to the facility to finance BDC’s investment pipeline in key sectors such as agri-business, clean energy, services, infrastructure and manufacturing.
As part of its strategy, the corporation aims to diversify its funding mix and reduce its reliance on shareholder and short-term revolving credit line financing while increasing longer term funding from borrowings.