BPOPF set to terminate P3.9bn Kgori Capital contract
Staff Writer | Friday December 15, 2017 13:00
Kgori was thrown into the spotlight last week when Seretse appeared before the courts on money laundering charges before he was later released on bail. Seretse resigned from the company on Monday.
The Investment and Risk committees of the P60 billion Funds yesterday met to deliberate on the Kgori matter and recommended that the contract, which comprises management of listed equities, fixed income and cash, be terminated.
“Given the gravity of the charge (money laundering) on Bakang Seretse, the corporate governance gaps such as non-disclosure of conflict on interest, violation of agreement by not declaring additional gains through the Fund’s investment, weak operational environment such as paying client funds into related parties accounts (i.e. NPF funds into Khulaco), it is recommended that we terminate the portfolio management contract with Kgori Capital,” reads a report compiled by the committees seen by Mmegi.
The board of trustees, chaired by Permanent Secretary to the President, Carter Morupisi, will on Tuesday meet to either adopt or decline the recommendation.
While the termination will be hard blow for the fast rising citizen-owned Kgori, industry rivals, African Alliance and Allan Gray are set to benefit from the whole debacle.
“We recommend that the equity portfolio be managed by Allan Gray while the fixed income portfolio be managed by African Alliance Botswana. The cash portfolio will be managed in house,” reads the report.
In statement released on Monday, which was meant to assure stakeholders, Seretse absolved the asset management company of any involvement in the money laundering charges.
If the BPOPF board decides to adopt the recommendations of the committees, Kgori’s assets under management (AUM) will be slashed by over 70 percent.
Kgori has seen its client base grow to over 15 institutional clients over the past four years, with corresponding assets under management in the P5 billion ballpark.
Last year, management at Kgori took over total control of the firm, in a deal that was seen as a triumph for citizen empowerment in an industry dominated by foreign controlled firms.
In the transaction, the local management team acquired an additional 51% in the Botswana firm from South African parent company, Afena Capital.
The asset management firm started operations in Botswana about five years ago with Seretse as the managing director, Alphonse Ndzinge (chief investments officer) and Sharifa Noor (chief operations officer).