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BIHL swoops on targets as expansion drive heats up

MBONGENI MGUNI
Spreading wings: Lesetedi says the expansion will be limited to the region PIC:SHELEADSAFRICA.COM
The country’s largest diversified financial group, Botswana Insurance Holdings Limited (BHL), is ramping up its expansion strategy, filing a deal with the Competition Authority soon.

It is also revisiting an insurance target it once courted in the region and spreading out into the pension fund and medical aid administration sector.

With financial assets of P14 billion in hand and pretax profits of P537.1 million for 2019, BIHL is amongst the country’s most robust groups, boasting wholly owned subsidiaries such as Botswana Life and Bifm. BIHL also holds 28.1% in pan-African microlender, Letshego Holdings, 37% in Funeral Services Group, amongst equity investments that stretch offshore.

Under a diversification strategy launched last year, the group eyes new growth opportunities, while also “strengthening its core”, to enhance shareholder returns. Currently, BIHL has an annual shareholder return target of 14.5%.

On Wednesday, BIHL CEO, Catherine Lesetedi told BusinessWeek the group had identified a local ‘opportunity’ it intends to approach the Competition Authority for approval to acquire. In addition, the group is revisiting a deal for an insurance group within the region that failed at the first attempt two years ago.

“We are an insurance and wealth management company and those are the businesses that we are always going to look at even when we are exploring markets,” she said.

“We are looking at in-country and opportunities outside, but there are lessons to be learnt from other entities that have been aggressive in expansion outside the country.

“For us, we are very prudent and we also believe in partnerships. We will not invest in a country where we don’t have a partner with skin in the game in terms of shareholding.

“We are very clear that we are really focussed on Southern Africa and we are not going to be extending beyond that.”

Beyond insurance and

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asset management, BIHL is also looking at investments that can ‘fit under its umbrella,’ in terms of the expertise the group has built up. Lesetedi said these would include opportunities in the pension fund and medical aid administration arena. However, an investment in the banking industry is out of the question.

“The bank one we are very clear. We don’t have the skills for banking and we don’t really have an appetite to go into banking, so that one is permanently off and it’s not something that we discuss.

“The medical aid administration side is something that we are actively looking at.

“On the pension fund administration, the new Retirements Act requires that Botswana Life separates the retirement annuity business from the life business. “So they are in the process of setting up a pension administration business,” she said.

“After that, when we have moved policyholders to the new business, it gives us an opportunity to explore fully whether or not we want to really do pension fund administration,” she added.

For the year ended December 31, 2019, BIHL received P142.3 million as its share of profit from its associates, more than two and a half times the value of the previous reporting period.

From a period of impairments in investments such as Letshego and Nico Holdings, BIHL’s associates posted strong performances across the board, making the argument for the group’s expansion drive.

“This is about really believing in your strategy and investing in businesses that we have the skill to help and that we can understand deeply,” Lesetedi told BusinessWeek.

“It’s also about our ability to actually assist where possible in those businesses.”

 



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