The Botswana Public Officers Pension Fund invested half a billion in ALC’s first fund to invest in local private equities, alongside undisclosed investment amounts from six other private and public pension funds.
This time the fund manager expects the second fund to raise even larger investment sums from new and existing investors.
At an investor meeting held this month, ALC CEO Bame Pule disclosed that the first investment fund had enjoyed stable growth and returns for investors with strong financial metrics such as an Internal Rate of Return (IRR) greater than 25%. The first fund is also delivering stronger returns that beat benchmark rates from the stock exchange.
“The fund continues to perform strongly despite economic headwinds. With an IRR greater than 25% and a slow and patient investment strategy, we are able to deliver strong returns for our investors whilst protecting their investment,” he said
The fund manager disclosed that the next fund will invest significantly in blue-chip companies that are mature and in industries that have the potential to deliver high returns. Pule further shared that the next fund has identified two companies that it will be investing in, one in primary healthcare and another in the financial service sector, specifically lending.
Whilst ALC is confident in delivering returns for its next investment fund, the CEO expressed concern about the size of mandates awarded to private equity as an asset class from pension funds, despite the bumper returns private equity offers as opposed to other asset classes.
“The size of the fund relatively remains very small, limiting our ability to invest in companies that can offer the best returns. There is a need to allocate more capital to private equity in order to drive returns,” Pule said.
Bank of Botswana data indicates that by September 2024, local pension funds had just P2.8 billion of their assets in local unlisted equities, out of total assets of P149.4 billion.
ALC currently has investments in FSG, a regional funeral service provider, and Minet Botswana where ALC is a major shareholder following the acquisition of Aon Botswana by the Minet group in 2021 and subsequent investment deals that made ALC the major shareholder.
