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┬á has annoyed most of the┬á shareholders as the private equity company, which had two members on the board, also wanted to play a role in┬á management of the┬á 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┬á BBS management and the rest of┬á shareholders collapsed since┬á 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┬á drafted some few years back which gave┬á Bifm Capital a permanent seat on the board. But that is said to have failed the test since BBS is governed by┬á rules and mutual principles┬á 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┬á should Bifm Capital insist on taking the Society to court, it risked getting its shares being redeemed and┬á thereby facing┬á 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┬á much bigger┬á advantage to┬á payout the P 150 million plus┬á an 11 percent ┬áper annum interest.┬á
The power to redeem shares rests on the Society and it can be exercised at anytime┬á when it feels that one of the principal shareholders is not acting in the best interest of the organization. That will┬á 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.