Sunday, November 1, 2020

Bifm Capital pushed to the corner

Bifm Capital,┬áan associate of the┬á Botswana Insurance Fund Management, suffered one of its biggest blows this week as its┬á members were┬á ejected out the of the┬á Botswana┬á Building Society’s board.

The move signaled one of the greatest de-taste by shareholders of “incestuous relationship” by some of the┬á board members of┬á BBS.

Bifm Capital is understood┬á┬á tendered for┬á BBS’┬á bid to raise P 2 billion┬á through debt, whose first tranche┬á is expected to be┬á issued in the near future.

The move  has annoyed most of the  shareholders as the private equity company, which had two members on the board, also wanted to play a role in  management of the  debt issuance that is hoped to fish-out the company from a pent-up cash demand.

Some of the shareholders this week indicated that the relations between Bifm Capital and  BBS management and the rest of  shareholders collapsed since  a decision to award the tender to Absa Capital instead of Bifm Capital.

The ex- Bifm Capital board members, Rhys Carr and Tim Marsland, had threatened to take the Society to court on the basis that┬á Botswana Development Corporation┬á representative’s┬á vote was “ invalid”.┬á

BDC┬á is on the board┬á┬á under the┬á Botswana Privatisation Asset Holding, an arm that┬á represents government’s interest in the society.

Bifm Capital has invested P 150 million, Botswana Government P 117 million, Motor Vehicle Accident Fund P 106 million and Botswana Police Staff Fund P 50 million into the Society.

Further, it is understood to have flagged an agreement  drafted some few years back which gave  Bifm Capital a permanent seat on the board. But that is said to have failed the test since BBS is governed by  rules and mutual principles  rather than by whims of shareholders.

The agreement is also understood to have not been sanctioned by the board or shareholders.

This week, analysts pointed out that  should Bifm Capital insist on taking the Society to court, it risked getting its shares being redeemed and  thereby facing  a much bigger embarrassment. If its shares get redeemed, they will lose out on the benefit of demutualization, which is still underway.

BBS will soon list a P 350 million bond on the Botswana Stock Exchange, which will give it a  much bigger  advantage to  payout the P 150 million plus  an 11 percent  per annum interest. 

The power to redeem shares rests on the Society and it can be exercised at anytime  when it feels that one of the principal shareholders is not acting in the best interest of the organization. That will  bring it to the same level where government was some few years ago.

Attempts to get a comment from Carr proved futile on Friday as he did not answer his phone.

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