The Botswana Public Officers Pension Fund (BPOPF) and its former asset manager, Capital Management Botswana (CMB) are focussing their arbitration talks on more than P200 million invested in Wilderness Holdings and Cell City, the most recoverable investments in a disputed P477 million portfolio.
The talks in South Africa come as BPOPF and CMB await a July date at the Court of Appeal (CoA), which could render the arbitration moot as the regulator, the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) pushes to take over control of CMB. The pension fund and CMB fell out early last year amidst allegations of impropriety and violations of the November 2014 Botswana Opportunities Partnership (BOP) deal under which BPOPF pumped P477 million into various investments managed by CMB.
Documents from the Court of Appeal indicate that CMB has agreed to give BPOPF 30 days written notice if it intends to “trade in or otherwise deal with” with the shares held in Wilderness and Cell City.
“Those two investments are the best chance for recovering anything for pensioners,” a legal expert close to the case told BusinessWeek.
“The rest of those investments are in companies that are either difficult to locate or structured in such a way that it would be impossible to gauge the value or the rights to those shares.”
Documents in hand show that CMB requested and was given P150 million to invest in Wilderness Holdings by BPOPF in March 2016, as well as P50 million to acquire 50% of Cell City in June 2016.
This week, BusinessWeek was able to establish that the BOP still holds equity in Wilderness Holdings, a Botswana Stock Exchange listed entity. The BOP holds 27.9 million shares in Wilderness, which by Wednesday were valued at about P162 million. Just over 106,000 of the shares are held in Wilderness’ listing on the Johannesburg Stock Exchange.
The BOP shares on the BSE represent nearly 12% of Wilderness’ issued shares.
BOP’s other investments are in Kawena (P150 million), AGILE (P50 million) and Bona Life (P57.5 million). Kawena appears to be a Mozambican retail group, while AGILE (or African Graduate Institute of Leadership and Enterprise) is a conceptual “high-end entrant” business school.
The Bona Life investment is linked to the NBFIRA lawsuit and its recoverability is in doubt as the insurance firm has struggled to stay afloat amidst a highly publicised capital crunch.
A report by former High Court judge, Peter Collins, indicates that the value of the investment in Kawena was “maybe zero”. Collins was briefly CMB’s statutory manager, before the asset manager won a High Court ruling last month.
“As will be seen with the exception of Wilderness Holdings and Cell City, I’m pessimistic about any recovery at all in respect of all the other investment assets.
“Excluding Foudellio Pty Ltd (the vehicle for the investment in Bona Life), I’m not even confident that the other investments were actually made or that they were genuine investable assets in the first place,” wrote Collins in his report.
Even as the talks continue, the former partners’ Court of Appeal case awaits on July 12 and 13. Should the regulator, NBFIRA win it would fast track its probe into CMB with a view to rectifying any suspicious transactions.