Afinitas Limited, a green field investment company incorporated in Botswana, opened its initial public offering (IPO) on Friday in a bid to raise P28.8 million from the bourse to finance its forays into Africa. The company has already raised P91.2m in private placement from local fund managers.
Afinitas Executive Director, Leutlwetse Tumelo told the media ahead of the IPO that the international financial services company will adopt a pan-African investment strategy and seek investments across diverse industry sectors. The IPO calendar opened on 26th June and will close on July 17th. It is expected that the listing and trading in Afinitas shares will commence from 27th July, 2015.
“Afinitas is focused on establishing and developing new businesses across Africa. The company seeks to increase shareholder value by providing seed investment into a number of new companies focused on different strategies or countries within the continent of Africa,” said Tumelo.
“Initially each subsidiary will be 100 percent owned by Afinitas Limited. It is likely that each subsidiary will require a second round of capital raising. Due to limited capacity of the local market, these funds are likely to be raised from external investors.”
Tumelo pointed out Afinitas intends to take advantage of a new interest in Africa as an investment destination, especially from large institutional investors. He said interest in Africa from European funds is at an all time high and that is driving the emergence of new investment opportunities within the continent.
“Afinitas is about the African story. We created a company that will leverage on Botswana’s IFSC and reputation as an attractive investment destination to launch into the rest of Africa,” said Tumelo.
But why Africa? In recent years, the continent has experienced a period of rapid economic growth that may reflect a long term, self-sustaining and positive growth cycle. The business climate in Africa is also improving due to a number of factors such as improved telecommunications and better governance in general. Tumelo further said that less intense business competition in Africa than in more developed markets may manifest itself in higher achievable rates of return on equity.
After its application to the listings committee of the BSE was granted, Afinitas listed up to 240 000 000 (two hundred and forty million) ordinary shares on the Venture Capital Market, subject to compliance with the BSE listings requirements in respect of number of shareholders, number of shares in issue, and spread.