CMB clinches another P380m BPOPF deal
Brian Benza | Friday December 16, 2016 16:40
This comes at a time when the Fund had withdrawn a P300 million private equity tender after applicants failed to meet their requirements.
In an interview with BusinessWeek, BPOPF chief executive officer, Boitumelo Molefe said they decided to extend CMB allocation because of the pace at which they were finding new lucrative private equity investments.
“They have very little dry powder with a lot of projects in the pipeline. Some of the companies they have invested in include Bona Life, Wilderness Safaris and another company operating in Mozambique,” she said.
Under a new investment strategy, BPOPF introduced private equity and infrastructure funds locally two years ago. In September 2014, the Fund launched a P800 million local private equity fund, P500 million of which was awarded to CMB with the remainder tendered out.
But Molefe now says the second tranche of the P300m tender was never awarded as none of the applicants met their requirements.
The BPOPF has P55 billion in assets under management (AUM) with 58% of the funds invested offshore. BPOPF is Botswana’s largest pension fund with over 150,000 members.
In Botswana, Molefe said the fund would feel pressure on its returns from investments on the Botswana Stock Exchange (BSE), which has traded southwards since the beginning of the year.
The BSE as measured by the benchmark, Domestic Companies Index (DCI), has weakened by over 10% on a year-to-date basis in 2016.
The Fund has P23.1 billion worth of assets invested in Botswana, the bulk of which, according to Molefe, is invested on the local stock market.
In another development that is set to shake up the local capital markets, the BPOPF has ushered in a new set of guidelines.
These guidelines will bolster citizen empowerment among local fund managers that handle the Fund’s P55 billion assets. In a pioneering and bold bid to see more Batswana owning more shares in fund management businesses as well as more citizen managers in such firms, the BPOPF will from next year only hand new mandates to managers that have a 25% citizen shareholding, 50% local representation on the board and 70% citizen participation in executive management.
In addition, the BPOPF will also fund start-up asset management companies owned by Batswana to the tune of P500 million as seed capital in a bid to see more citizens venture into the lucrative investment management business.
From its multi billion pula AUM, the BPOPF has 42% (P23 billion) invested in Botswana’s stocks, bonds and property through different asset managers.
Because of the size of the Fund, clinching mandates from BPOPF has proved to be a cash cow and the main sustenance for the bulk of the local fund managers with their management fees ranging between 0.8 to one percent of the mandate size.