Monday, October 26, 2020

Afinitas losses grow five-fold

Afinitas, Botswana’s first pan-African investment holding group, has been battered by the coronavirus containment measures, which have restricted large gatherings, a development that has devastated Afinitas’ top revenue earner, leaving the company with a huge loss.

The Botswana Stock Exchange listed venture capitalist group saw its loss in the six months ended June 2020 rise to P11.3 million, up five-fold from last year’s corresponding period’s loss of P1.8 million.

“The Covid-19 outbreak has had a disappointing impact on the performance of the group. The impact will continue to be felt by the group throughout 2021. The board is looking at strategic options to keep our costs as low as possible during these uncertain times while identifying new business opportunities that may arise because of the global pandemic,” wrote Afinitas chairman Lesang Magang and the company’s managing director Rupert McCammon.

The investment holding group has stakes in several companies and was earlier this year forced to exit a promising market due to Covid-19 disruptions. Afinitas listed on the BSE in 2015 under the domestic venture capital counter and used the proceeds from investors to acquire 50 percent shareholding in Africa Events Limited (AEL), 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, which later became EQOS Services, and the venture capitalist added Adventis Limited to its portfolio, acquiring 66 percent of the specialist investment management company focusing on the African continent. . The investment focused company has also taken a 9.6 percent stake in Icecap, a company based in Jersey that provides trust, company and administration services.  Afinitas’ expansion has been gobbling most of the group’s money, but the company had started to narrow its losses.

Before coronavirus was declared a pandemic in late January, Africa Events Limited was preparing to host its largest ever AFSIC – Investing in Africa event in May 2020, however the arrival of Covid-19 meant that the event was unable to be held in 2020 and has been postponed to May 2021, the company said.

“In prior years the event had gained considerable momentum, and is increasingly recognised as Africa’s investment event, and a major conduit of investment into Africa. The impact of Covid-19 meant that our key income generator AEL was unable to hold its flagship event AFSIC 2020 causing revenue for the 6 month period compared to the same period the year before to fall from $1,039,466 to $19,424  in revenue,” noted Magang and McCammon in the statement.

The other promising subsidiary, Adventis was in the midst of encouraging discussions regarding potential investment into its portfolio of Africa focused funds. According to Afinitas management, the discussions were put on hold at the start of the Covid-19 outbreak, and they remain hopeful that as business confidence starts to return to the global economy, they expect the discussions to restart.

Afinitas is shutting down Ethiopia Investments Limited, its subsidiary which was focused  on the development of EQOS Services, the company’s majority owned business process outsourcing unit. Prior to Covid-19,  EQOS had been showing signs of growth in business income, however when Covid-19 hit worldwide business development expenditure plans were put on hold, and a number of the company’s most important clients did not continue to utilise EQOS Services, according to Afinitas note to shareholders.

“In addition, our team in Addis was unable to finish projects that it had ongoing within Ethiopia as they were no longer able to access clients’ offices due to the lockdown. As a result, a difficult decision was taken to close the EQOS Services company. The Group will exit Ethiopia as a result,” said Magang and McCammon.

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