As at June 30, the country’s pension funds held more than P176 billion in assets, with about 44.6% of these held locally.A long-running challenge for holders of sizeable assets in the country has been finding investable opportunities in the local economy, areas where funds can be invested and kept safe with returns that reliably beat market metrics.The Dangote Refinery’s $1.6 billion Initial Public Offer not only represents Africa’s largest ever public float, but the offer is a dollar-based, market-beating and apparently iron-clad investment, one with major expansion plans.While securing access to the shares at local level would not necessarily give the shares “local asset status” as defined by NBFIRA, local investors would enjoy lower fees, costs and potentially the benefit of buying in using the Pula.It was no wonder then that when he recently visited Gaborone, Aliko Dangote, Africa’s richest man, met a roomful of asset managers and their clients - the pension and insurance funds - packed and eager to engage.“We're global in our nature and we search for one thing, yield or capital returns,” said Debswana Pension Fund CEO, Thato Norman. “We are similar to any other world-class economy and we have two major aspects for investors, which is our rule of law and also market infrastructure. “If you look at our history, our founding presidents, the late Sir Seretse Khama and the late Sir Ketumile Masire, were called very brave or very foolish. “They came into a barren land and they developed it into one of the fastest growing economies in the world. That's where we converge. “We're looking at yourselves as brave investors, as pioneers and we’re saying as Botswana, we're also pioneers and very curious.”The DPF is the country’s second largest pension fund with assets of more than P12 billion.The IPO, its size and potential returns, have stirred up interest across the continent. As it opened last week in its home market of Lagos, the Dangote Refinery IPO also cross-listed on the Johannesburg Stock Exchange.Buzzing around the IPO are scores of brokers and dealers looking to secure a block of shares for themselves and their clients, in what is widely expected to be a quickly over-subscribed process.The BSE is hoping that the talks it has engaged in to secure access at local level to the IPO, bear fruit. One avenue that is floating around the local capital market involves something called sponsored or unsponsored depository receipts. Under the sponsored variety, the Dangote Group would set aside shares in the IPO for a depository bank that would make these available at local level for investors in the country. In the unsponsored scenario, the depository bank would go it alone, snap up a block of shares and avail them to the BSE.Earlier this year, the BSE issued its guidance for the listing of this type of vehicle, called Botswana Depository Receipts” or BDRs.“BDRs offer local investors access to global investment opportunities without having to bear most of the trading and custodial costs normally associated with such crossborder transactions,” the Exchange said. “Investors are buying shares of a foreign listed company on the BSE where they are familiar with the trading, clearing and settlement processes of the BSE and CSDB. “BDRs provide increased diversification into non-Botswana securities without many of the obstacles investors may experience during the purchase and holding of securities outside of their local market.”However, the allure of the Dangote IPO runs deeper than the returns.Kwenantle Otukile, CEO of the country’s largest pension which boasts assets of about P130 billion, explained the interest.“As the Botswana Public Officers Pension Fund, I can assure you that we view this opportunity as one of national interest,” she said. “It is of a strategic nature to the growth of the economy of this country, especially as we have a special focus on the diversification of the economy. “This couldn't have come at a better time and it is also very important to note that as institutional investors, the BPOPF in particular will actually be looking in terms of not only the risk-adjusted returns that it can get for members, but also the larger impact that this is going to have for this country.”Otukile explained that not only did the Dangote IPO offer an opportunity to convert capital to returns that improve the lives of Batswana, but pension funds would be securing rare access to an industry previously unavailable to the country’s assets.“This is an opportunity that we cannot even afford to miss,” she said.While he did not make firm or at least public commitments during his engagement with the local capital market, Dangote has stressed that he wants the IPO to be a pan-African affair, providing access for those previously shut out of wealth-making opportunities.When it opened on Monday, the IPO offered 4.1 billion new ordinary shares at a price of 40 cents per share (P5.43 each). Buyers are required to buy no less than ten shares, a threshold designed to provide access to more people. Typically, IPOs typically limit sales to blocks of 1,000 shares and above, meaning investors cannot buy less than 999 shares.“I think you must realise that what we are trying to build is to industrialise Africa, because we have actually made quite a lot of mistakes in the past, where we have been actually waiting for foreigners to come and develop our continent and that will not happen,” said Dangote in Gaborone. “Apart from industrialising Africa, we don't want to own everything by ourselves. “We will now make sure that by the time that we have our annual general meeting, millions of people will collect their dividends. “This is not a Nigerian listing; it's an African listing and we are going to pay everybody in dollars.”.The tycoon’s plans are as daring as they are mind-blowing. The Lagos State refinery currently produces about 650,000 barrels per day, the largest in Africa, but plans are underway to expand to 1.4 million by 2030, one of the largest in the world. The Dangote Group also has plans to expand its production of fertiliser, cement, sugar and chemicals, while branching out into business sectors such as electricity, mining, steel and others.The expansion programme is expected to be implemented over a five-year period and is currently targeted for completion by 2030.“We don't want to get there on our own alone,” Dangote said. “What we are trying to do is to see how do we drop this prosperity down to the common people on the street. “It's by having this vision.”The pension funds and their hundreds of thousands of members are eagerly waiting to see whether they can secure a piece of the vision.
