BPOPF tender sparks market excitement

MBONGENI MGUNI
Staff Writer | Friday July 9, 2010 00:00

 

At its August sitting, the Botswana Public Officers Pension Fund (BPOPF) board will decide which of the four firms to appoint its asset/investment consultant, a key and highly lucrative position in the management of the Fund's P29 billion assets.

Alexander Forbes, whose consulting division has been in the position for several years, is again in the running for the contract whose duration has been set from October 2010 to September 2012.

Although official confirmation was unobtainable at the time of going to press, it is understood the other bidders could include Novare and Jacques Malan, two entities who have had previous interaction with Botswana's largest fund.

This week, sources in the asset management industry explained that grabbing the consultancy position was virtually equivalent to occupying the most enviable position in an asset management industry fraught with limited profit opportunities.

Part of the BPOPF's P29-billion kitty is managed by seven asset firms and forms these firms' mainstay because BPOPF also makes up about 80 percent of the industry.'It's a very powerful and enviable place to be in,' one source explained. 'The consultant calls the shots and asset managers would want to toe the line and be in the consultant's good books by whatever legal means possible. If the consultant has a problem with any asset management, this could be the end of their business in Botswana.'

Broadly, the consultant plays the role of advisor to BPOPF, assessing the Fund's assets and liabilities, evaluating how much wealth needs to be created to meet obligations to members as a going concern. The consultant assesses how best the Fund can maximise its incomes to the benefit of all members, who are retiring public servants. 'The consultant does this through various means, including advising the top global investment managers in each asset category and liaising with fund managers,' the source said. 'The consultant also creates linkages between local fund managers and these top notch managers as part of the effort to obtain best returns for the Fund.'

Critically for the country's small asset management sector, the consultant evaluates local fund managers' strengths, weaknesses, performance and other factors within the context of local laws. Thus, in its role of advisor to BPOPF, the consultant could sideline or incorporate certain firms to the detriment of others in the quest to maximise returns to the Fund.

The Chairperson of BPOPF's Investment Committee, Leonard Mutheto, outlined the consultant's role in the Fund. 'These will be the advisors,' Mutheto said. 'They advise on investment strategy and asset classes. This contract is awarded on a two-year basis by BPOPF and when it expires, we either go for tender, renew or extend.

'The process is that whenever a contract comes to an end, it's best to go for tender so that you open up for other players who have come into the market and give yourself a wider panel of best price.

This process also makes sure that there's transparency.' Mutheto confirmed that the tender was open, meaning any entity, including the immediate past consultant, may enter the bid. He said the investment committee was yet to receive submissions for the position.

BPOPF's General Manager (Marketing and Communications), Lesedi Moakofhi, said several steps would be taken before a decision was made. 'We have just started the evaluation and it has to go through the investment committee, then be placed before the board for approval,' she said. 'The announcement will be made to the successful bidder after the August board meeting.'

The consultancy position will also be a prime earner for the winning company as it attracts lucrative fees from the management of BPOPF's assets.