Insurance brokers, Aon Botswana, announced this week that they had entered into a deal in which they will transfer 25 percent of their shares, worth P25 million, to local shareholder CEDA Venture Capital Fund, in a move aimed at boosting citizen participation in the firm.
The P200 million CEDA Venture Capital Fund was set up in 2003 and Venture Partners Botswana (VPB) was appointed as its fund managers. Aon Botswana's move now puts 30 percent of the company shareholding into the hands of citizens as employees of Aon already hold five percent in the company, which they acquired in 2004.
The remaining 70 percent is held by the Netherlands-based Aon Holdings.
Announcing the deal this week, the chief executive officer of Aon Botswana, Dora Moremi, said that the decision to partner with CEDA Venture Capital Fund was influenced by the fact that the two shared a lot of synergies, especially with regard to citizen empowerment and commitment to the economy. An upbeat Moremi said CEDA Venture Capital Fund was preferred over other forms of empowerment - such as floating shares on the stock exchange - since the decision to give 25 percent shareholding to the fund was not a cash-raising move.
"We were actually looking for sustainable growth, not to raise cash," Moremi told Business Today.
"Both companies share synergies as leading-edge service providers in insurance broking and venture capital on the Botswana market." In welcoming their new level of partnership with AON, the Managing Director of Venture Partners Botswana, Anthony Siwawa, said it had been a long journey worth travelling. Siwawa described the deal as "a sizeable transaction" that should end the debate regarding what extent Batswana were involved in the economy of their own country. He said that since they started, they had done much better than other financiers in taking risks and providing start-up capital.
Venture Partners Botswana, which acts as an equity fund, was already heavily involved in transport, tourism and the tannery industry.
The aim of the CEDA Venture Capital Fund, which was outsourced to Venture Partners Botswana, is to promote partnership ventures between citizen and foreign-owned companies with skills transfer in mind. The minimum amount for investment is P500, 000, while the maximum is P30 million; the CEDA Venture Capital Fund looks to realising a return of 23 percent on its investment.
Venture capital business is relatively new to Botswana, but it is driving stronger economies, like South Africa's.