Botswana Insurance Holdings Limited (BIHL), the single largest shareholder in Letshego Holdings, has upped its stake in the pan-African microlender in what is seen as a major vote of confidence in the group.
Last September, fair value assessments by BIHL into its investments resulted in a P106 million impairment attributed to Letshego for the half year to June 2019. For the year to March 31, 2018, similar assessments resulted in a P140 million impairment from Letshego.
The microlender was the Botswana Stock Exchange’s biggest loser for 2019, shedding 56.2% in value or nearly P2 billion, as an exodus of executives purportedly over the group’s strategic direction, rattled investor confidence. Rather than pare down its exposure to Letshego, BIHL appears to have taken advantage of the bargain shares on offer and increased its (BIHL) holding from 26.17% to 27.95%.
“The board has been informed by BIHL that it has increased its shareholding in Letshego Holdings Limited from 26.17% to 27.95%,” Letshego said in a recent statement.
The move means from 561 million shares worth about P908 million in December 2018, BIHL now holds 599.3 million shares in Letshego which were worth P425.5 million by December 2019.
Besides Letshego, BIHL also holds 50% equity in Botswana Insurance Company, 36% in the Funeral Services Group and 25.1% in Malawi’s Nico Holdings Limited. The group’s associates besides Letshego were however performing according to the last results, being the six months to June 2019.
Meanwhile, Letshego says it expects its upcoming full year results to show a profit before tax
“There is improvement to the group’s financial performance,” Letshego executives said in a recent investor update.
“Further updates on the 2019 financial performance will be given during February 2020 in advance of the expected publication of the year end results in early March 2020.”
The group also hinted that its dividend policy for the upcoming full year results would change from 25% of aftertax profits.
In addition, the group said it had bolstered its board with new independent directors and key management vacancies were due to be filled soon.
This year, Letshego is expected to move forward with plans to exit some of its 11 African markets, as part of a strategic refocus announced to investors late last year. Although the group was tightlipped on the matter, market analysts said much of the slide in share price last year and the high turnover of executives, including the CEO who served just six months, were due to disagreements over the African growth strategy.
Throughout the turbulence BIHL has held steady however, with senior board members saying the group held a long view of its interests in Letshego.