The Botswana Public Officers Pension Fund (BPOPF) is battling to recover P477 million in assets and cash from Capital Management Botswana (CMB) following the termination of a private equity investments contract between the two parties.
BPOPF is reported to have terminated CMB mandate after investigations revealed that the fund manager flouted agreed investments policies and guidelines.
Industry insiders say the contract was terminated on October 30, 2017 with an order for the fund manager to return all assets, but CMB has not complied with BPOPF’s demands.
Although their private equity mandate had been extended to P830 million from P500 million, CMB had only drawn down P477 million and invested in companies such as Wilderness Safaris, Bona Life among others including hardly known entities such as Kawena, Mokobi Airlines and Agile University. Chief among the reasons for the termination of the mandate, BusinessWeek understands that CMB had bought a 10% stake in Wilderness Holdings, when their investment mandate was limited to only private equity.
“CMB were to only invest in companies that are not listed, but they bought a 10% stake in BSE-listed Wilderness Holdings and reportedly told the BPOPF that the tourism company was on the verge of delisting. It’s been more than a year now and Wilderness is still listed. CMB is also accused of investing in start-up companies such as Kawena and Agile when their mandate demanded them to invest in established companies,” said a source in the industry. Although the assets have not been returned a month after the termination, BusinessWeek has learnt that CMB deposited P50 million back into BPOPF’s bank account this week. “It is difficult to understand why they deposited the money or how they got it. They were not supposed to hold cash in the first place. Their mandate was to find suitable investments and then request the funding from BPOPF and invest it. They were not supposed to hold cash,” added another market insider.
CMB specialises in private equity and is owned by Tim Marsland and Rapula Okaile.
Through a fund called the Botswana Opportunities Partnership (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.
The BPOPF is the main investor in the BOP. The BPOPF is today expected to file an urgent court application seeking to compel CMB to return the P477 million worth of assets.
But industry insiders say there are doubts over the recoverability of the full amount as investigations have cast doubts on the viability of some of the companies that CMB had invested in.
There is also a an alleged discrepancy in the amounts of money that CMB claims to have invested in Bona Life, with CMB claiming that they have put in P67 million while documents at hand show that only P50 million was invested in the insurance company.
Asked to respond to these allegations, Marsland declined to comment on the BPOPF issue directly but called for a public enquiry of the whole pensions funds and asset management industry.
“CMB, in the interests of full transparency, calls for a public independent inquiry into matters in the industry, including pension funds and their managers, where all allegations can be tested in a public forum. CMB will co-operate with any independent public inquiry, as long as those at the centre of making untested allegations co-operate to the same degree.
CMB is confident, that those making unfounded allegations, will welcome the opportunity to publicly prove their claims,” Marsland said. Under a new investment strategy, BPOPF introduced private equity locally three years ago. In September 2014, the fund launched a P800 million local private equity fund, P500 million of which was awarded to CMB with the remainder tendered out.
BPOPF chief executive officer, Boitumelo Molefe declined to comment on the matter citing client confidentiality while enquiries sent to Bona Life were not responded to by the time of going to press.