Tuesday, March 5, 2024

Bifm’s footprint in Africa saves it from global crunch whitewash

The brand name, Botswana Insurance Management Fund (Bifm) is revered in the country’s asset management business as that of Debswana Diamond Mining in the mining sector.

However, its fame was achieved within the shortest period of time ÔÇô 2003 and 2007 — as assets under its management grew from P 7 billion to P 16 billion before the credit crunch that shaved its asset base by 10 percent last year.

The growth was driven by the no nonsense man, Victor Senye, its first Motswana chief executive officer who was initially recruited from the Botswana Development Corporation (BDC) in 2003, as head of Business and Strategy, to oversee the company’s property and unlisted assets before taking the reigns in 2005.

“At that time, risk management and diversification was very important to our business. We went for a new business line and set up Bifm Capital,” explains Senye.

The diversification of the company to other investment classes in addition to stocks and bonds had to involve the formation of Bifm Capital — a specialised investment arm of the company that deals with corporate finance and structured instrument — backed by a strong financial muscle.

In the local market, it has spread its wings to some of today’s big household names such as the African Banking Corporation, Botswana Building Society, Choppies, Gaborone Private Hospital, Kgolo Ya Sechaba (KYS), which has invested in Gaborone Sun Hotel, Letshego Holdings, SFG, commonly known as Lynns Funerals, Sefcash and Turnstar, among others.

In its quest to grow shareholders’ value, Bifm has also entered into a joint-venture with Rand Merchant Bank Properties, a relationship that saw the company being a pioneer in Private Public Partnership (PPPs), while at the same time is mulling over plans to fly Botswana’s flag across the region by setting up a Regional Property Fund.

“These are investments which saved us from the global financial crisis. And even going forward they will continue to bring in a steady flow of money to the investors,” he says of African Investments.

The company has also invested in Zambia ÔÇöwhere their investments are still surrounded in some controversy — as part of its quest to enter the fledgling African market and is currently rubbing its hands to get into Kenya and Namibia.

The Zambian government, in its attempt to engender citizen empowerment, has passed a law that will see Bifm’s investment falling from over 80 percent to less than 50 percent in its investments.

The issue is still being addressed diplomatically. According to Bifm, the new law is discriminatory, targeted against certain sectors and it is expected to be applied retrospectively.

If that goes ahead, that will leave Zambia in no better position than Zimbabwe’s controversial Indigenisation and Empowerment Act. The citizen empowerment laws are deemed to have been designed to chase away the much needed capital investment from the region.

“We are very, very financially strong and we provide six times cover to our shareholders against the regulations which say that we have to be two times,” reveals Senye.

“At this time of global financial crisis, only the guys with strong base are the ones who can now stand up to make noise,” he says, in an upbeat mood as he spoke of the Regional Property Fund.

Bifm’s cautious forays are being driven by its status of being quoted in the local bourse where shareholders demand nothing else from its executives but profit and strong earnings year-on-year.

“The test came to me when the markets started to tumble. Despite the fact that we dropped 10 percent, we still made profit. And still felt that we could do other things that can bring shareholders’ value,” he adds.

“The level of responsibility on us is very high compared to other asset managers,” he says, adding that the parent company, Botswana Insurance Holdings is registered as an insurance company.

Given the sought of responsibility imposed on them as a company in the past, they had to take some active roles in companies that it invested in.

That involvement often resulted in some open burst ups with the management of those entities and often times being asked hard questions by investors on those which were not performing well.

Among those sweet relationships that ultimately turned into bitter quarrels is its involvement with Metcash of South Africa in Metsef, where Bifm had to propose a Texas Hurt trick at Lobatse High Court to resolve their dispute. In the end, Bifm won while Metcash claimed that it was bullied.

The other one involved regional tourism outfit, Africa Tourism Limited (ATL), where directors of the company were alleged to have defrauded the shareholders of well over P 60 million before its collapse.

Contemptuous individual millionaires who had invested in the collapsed outfit asked tough questions about the level of corporate governance in the entity.

“The shareholders capital is very important to our strategy. That is why in the past we took an active role in some companies that we invested in. We believed that the shareholders’ value was very important and it worked well for us. We might have differed with the management of the companies on the question of strategy,” he says.

“We have done well in Botswana and we are now looking at a Regional Property Fund. We will have it as Bifm’s subsidiary and ensure that the benefits flow back into Botswana. Currently, we are looking at Namibia and Kenya on the property side,” Senye explains.


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