The 11-year-old firm secured a P500 million private equity mandate from the Botswana Public Officers Pension Fund (BPOPF) in 2018 and has thus far invested half the capital in local entities such as the Funeral Services Group and the Minet Group.
Private equity or capital investment made into companies that are not listed, is a key financier in the economy, particularly in the pursuit of economic diversification, as the Botswana Stock Exchange firms represent a narrow piece of the spectrum of private enterprise.
Speaking at the firm's annual investor meeting last week, Pule said the local renewable energy sector, particularly solar power, represented strong opportunities for private equity.
“We don’t have sector preferences for our investments, but emerging solar and renewable energy, including the Independent Power Producers will be a magnet for capital,” the CEO said. “Botswana has the ability to be the leader in solar for Africa and the ability to supply the region. “We should be going gangbusters building power plants in Botswana to supply the region and that’s why we want to play a role and find the right partners for this.”
Pule said Botswana’s prime positioning was also in terms of the cost of developing renewable energy projects on the continent.
“The biggest expense item for renewables is the interest on the debt. “Thanks to the great job the stewards of the economy have done, Botswana has the best credit rating in Africa and therefore, the lowest cost of debt and better returns,” he said.
Pule said the private equity firm would be deliberate in selecting which opportunities to pursue. He pointed out that since securing the BPOPF mandate, Africa Lighthouse Capital has looked at about 250 investment opportunities in different sectors, but only closes up to two deals a year.
“In the solar deals, we want to make sure the initial tariff is at the market rate and we need to get a return that’s commensurate with our risk,” he told the investor meeting. “It’s important that there’s an escalation if the project escalates in costs of operation. “Also very important for us is who is doing the engineering, procurement, and construction, as well as who is doing the operations and maintenance. “We have companies that we want to work with in that space, who have the experience to handle that.”
Southern African Power Pool officials recently told BusinessWeek the region had an electricity deficit of more than 10 gigawatts at peak, from about six gigawatts last year. The officials said there was an increasingly urgent need for more generation projects and the finalisation of long-planned interconnecting transmission in the region.
