The Botswana Public Officers Pension Fund (BPOPF) has terminated a P3.9 billion contract with Kgori Capital following the charging of the asset management company’s former managing director, Bakang Seretse with money laundering.
Kgori was thrown into the spotlight recently when Seretse appeared before the court on money laundering charges before he was later released on bail. Seretse has since resigned from the company.
Mmegi Business has gathered that Tuesday’s board meeting unanimously endorsed last week’s recommendation by the Investment and Risk committees that the contract, which comprises management of listed equities, fixed income and cash, be terminated.
“The board members, except for the chairman who was asked to recuse himself because of perceived interest in another asset management firm, agreed to the recommendation to terminate the Kgori Capital contract,” said a board member who attended the meeting.
The board member declined to be named, as he was not authorised to speak publicly on the matter. Last week, the investment and risk committee met and recommended that Kgori’s equity portfolio be moved to Allan Gray while the fixed income portfolio is managed by African Alliance Botswana and the cash portfolio be managed in-house.
“Given the gravity of the charge (money laundering) on Bakang Seretse, the corporate governance gaps such as non-disclosure of conflict of interest, violation of agreement by not declaring additional gains through the Fund’s investment, weak operational environment such as paying client funds into related parties accounts (i.e. NPF funds into Khulaco), it is recommended that we terminate the portfolio management contract with Kgori Capital,” reads a report seen by Mmegi Business compiled by the committees. Founded five years ago, as Afena Capital, Kgori has grown rapidly to become one of the most active and visible asset management companies in the country.
Kgori’s rapid rise in the industry can also be attributed to the backing they received from the cash-rich, BPOPF in the last few years. Kgori has seen its client base grow to over 15 institutional clients over the past four years, with corresponding assets under management in the P5 billion ballpark. Last year, management at Kgori took over total control of the firm, in a deal that was seen as a triumph for citizen empowerment in an industry dominated by foreign controlled firms.
In the transaction, the local management team acquired an additional 51% in the Botswana firm from South African parent company, Afena Capital. The asset management firm started operations in Botswana about five years ago with Seretse as the managing director, Alphonse Ndzinge (chief investments officer) and Sharifa Noor (chief operations officer).
Asked to comment on the termination, Kgori Capital yesterday said they had not been formerly notified on any development regarding their contract with BPOPF. “We have not heard anything officially, so are not comfortable speaking to speculation. We would be truly saddened, however, if this was the case, as we believe Kgori Capital has always worked in the best interests of clients, including BPOPF, a significant client of ours. As Botswana’s biggest pension fund, we are proud to offer services to BPOPF.
These are services delivered with passion and commitment from Botswana’s only 100% citizen-owned and run asset management company, a true Botswana business. We continue to serve our clients with the utmost dedication and the confidence that we strive to deliver on our every promise with sound governance, transparency and well entrenched controls.
We remain strong, focused and committed to our stakeholders, customers, supporters, family and friends, whom we look forward to serving well into the future,” joint executive managers, Alphonse Ndzinge and Sharifa Noor said yesterday in a statement. BPOPF CEO Boitumelo Molefe declined to comment citing client confidentiality.