Afinitas Limited, a pan-African focused investment company, says it will now focus on diversifying income streams, but expressed concerns about entering new markets.
Lesang Magang, Afinitas Chairman, said the company has successfully developed the necessary corporate structures, allowing the company to focus on revenue growth. Magang’s remarks were in response to growing concerns that the company’s performance has not been satisfactory, rising concerns about Afinitas’ business model.
Listed on the Botswana Stock Exchange in 2015 under the domestic venture capital counter, Afinitas has been reporting losses with the investment focused company pumping millions into new ventures. After raising money through listing, the company acquired a 50 percent shareholding in Africa Events Limited which entirely owns the rights to Africa Financial Services Investment Conference (AFSIC). In 2016 Afinitas followed with establishment of two new companies; Ethiopia Investments Limited and Adventis Limited, committing P50 million to the two ventures.
In the past the company’s top honchos have defended reported losses as teething problems of a new start-up company, explaining that operating costs are going to exceed revenue generated due to investment in human resources and infrastructure at a time when revenue streams are not fully developed. In 2017, the company said the focus was on the creation of the correct operational structures for the various businesses to provide them with a platform to grow strongly in the future, including the development and implementation of business systems and processes.
Leutlwetse Tumelo, Afinitas promoter and executive director, reiterated that the group is focused on revenue growth this year and that some of the investee companies were showing positive signs of growth. The company’s stock price which has been flat lining ÔÇô the stock price has been stagnant since 2016 at P1.05, a measly 5 percent appreciation from the listing price ÔÇô is expected to spurred over time by growing revenues.
“The BSE is generally an illiquid market with very low share trading especiallt on companies listed on the venture capital board,” Tumelo said. “At the current stage of development, the company has not started generating revenues. Once revenues start to increase most investors would have greater interest in the stock.”
Three years after listing at BSE, Afinitas Limited has admitted that it has not yet started generating revenues at the back of a very slow market in share trading in the BSE, particularly on the venture capital Board.
Pako Thupayagale, of Investec company had pointed out that Investec monitor the share price and have noticed that it is flat lining. He sought to establish the company’s strategic performance and whether the Afinitas Board of Directors was satisfied with it.
“Investec like Afinitas model which has potential to grow but they have not seen growth and are worried about Ethiopia,” Thupayagale added.
In general Afinitas is at the building stage of growing its various business interests, this stage involves considerable upfront investment, and in common with many start-up companies Afinitas’ costs of $1.9m exceed revenue at this stage.