Bifm Capital (Pty) Ltd, a subsidiary of Botswana’s biggest fund management company, Bifm, is to launch a new mining fund aimed at investing in mining companies the majority of whose assets are based in Africa.
The Botswana Africa Mining Fund, which will be domiciled in Botswana and registered as a public company,┬áis expected to be launched during the┬áfirst quarter of 2007 and would look to source investment from both local as well as foreign investors.
Bifm Capital director, Rhys Carr, told The Sunday Standard last week that the intention, amongst others, is to take advantage of booming commodity prices by investing in Africa’s natural resources.
“The history of mining in Africa is such that it has largely benefited Australian, Canadian and European investors on whose exchanges many resource companies are listed. We feel that the time is right to launch a Botswana domiciled investment vehicle that will give Batswana and other investors the opportunity to share in the profits to be made from African based mining assets,” he said.
It is intended that the Fund would be registered┬áwith the Bank of Botswana as a Collective Investment Undertaking (CIU) and accredited to the International Financial Services Centre (IFSC). It is anticipated that the Fund would be capitalised between US$50 million to US$100 million and would be a dollar denominated investment vehicle.
The decision to domicile the Fund in Botswana was based on a number of factors not the least of which were Botswana’s developed and progressive legal system, its advanced financial infrastructure, high skills levels and Botswana’s rich mining history and tradition.
In addition, Botswana has no exchange controls and has the highest sovereign credit rating in Africa from international credit rating agencies such as Standard & Poor and Moodys. These two additional competitive advantages, coupled with the tax concessions that are available to both CIU and IFSC companies, made Botswana the prefect domicilium from which to launch an African focused and based resources fund.
“There is a lot of cash chasing after limited investment opportunities in this economy and we see it as part of our responsibilities as investment professionals to develop and create new and innovative investment opportunities within Botswana,” Carr said. “The Fund will look to mitigate the risk inherent in commodity investing, through its investment philosophy and strategy.”
The Fund will have a relatively flexible mandate to make a variety of investments into companies the preponderance of whose assets are based in Africa. It will be able to invest, through debt, equity, derivatives or a combination thereof, into other mining funds, listed and unlisted investments or any other approved investment. However, all investments made will need to be valued and priced on a monthly basis as the Fund will supply all investors with monthly valuations.
“This will be good for Botswana and will hopefully position Botswana as a reliable source of mining funding in Africa,” Carr said.
This comes at a time when international mining companies are expressing a renewed interest in Africa’s resource sector from copper to zinc due to a boom in international commodity prices┬álargely aided by China and India’s economic boom.