A private equity fund backed by the cash-flush Botswana Public Officers Pension Fund (BPOPF) in close to buying Lobatse Clay Works (LCW) from the Botswana Development Corporation (BDC).
As BDC continues to divest some of its subsidiaries, BusinessWeek has learnt that the Botswana Opportunities Partnership (BOP), a private equity fund in which the BPOPF has invested P830 million, is buying an 80% stake into the Lobatse-based bricks and pavers manufacturing company.
The deal, which is currently before the Competition Authority for regulatory approval, will be done through BOP’s fund managers, Capital Management Botswana (CMB).
CMB is an investment company, specialising in private equity management and its directors are Rapula Okaile and Timothy Marsland.
“The Competition Authority therefore seeks any stakeholder views for or against the proposed merger,” the competition watchdog said in a statement.
Through the BOP, CMB has invested in different sectors of the economy with the BPOPF increasing its mandate from the initial P500 million to P830 million last year.
In an earlier interview with BusinessWeek, BPOPF chief executive officer, Boitumelo Molefe said they decided to extend CMB allocation because of the pace at which they were finding suitable private equity investments.
“They have very little dry powder with a lot of projects in the pipeline. Some of the companies they have invested in include Bona Life, Wilderness Safaris and another company operating in Mozambique,” she said.
The BPOPF, which is Botswana’s largest pension fund with over 150,000 members, has P55 billion in asset under management (AUM) with 58% of the funds invested offshore.
On the other hand, Lobatse Clay Works was established as a private company in 1992 and is wholly- owned by BDC. Lobatse Clay Works, which exports clay face bricks to South Africa and Namibia, produces in excess of 30 million units per year and is involved in most of Botswana’s major construction projects.
The divestments by BDC is part of its strategy adopted in 2014 in which it said it would sell 12% of its portfolio in ‘matured industries’ and invest in new sectors. BDC has so far sold commercial and residential properties around the country and other companies such as Cumberland Hotel, Toro Lodge, and Khawa Lodge as well as disposing of its stakes in Metropolitan Botswana, Asphalt Botswana and Kwena Rocla, Golden Fruit and Can Manufacturing. As part of its ambitious strategy, BDC is investing on new projects that will not only boost the industrialisation agenda of the country but also diversify Botswana’s exports composition, which is currently dominated by diamonds. Industries targeted under the strategy include large-scale investments of not less than P30 million in sectors such as energy, in particular solar power plants, manufacturing, agriculture and other infrastructure projects.