Bank of Botswana (BoB)’s preferred pension fund administrator, GlenRand MIB’s loss-making division, Benefit Services, broke the South Africa corporate history record last week when it was bought for R1 (87 thebe).
GlenRand MIB was awarded the Bank’s P142 million pension fund early last month after it was unceremoniously pulled from Alexander Forbes. The company is being bought by Caynon Springs for R1 which is considered to be a premium over of its value considering that it has built a mountain of losses over the years.
The company’s resident managing director, Frank Frith, shrugged off concern over its South African operations’ poor performance saying that they did not affect pensioners in Botswana.
“This transaction does not affect GlenRand MIB (Botswana) benefit services division as it is an independent operating company, backed up by its own technical management team, independent and robust IT system that are not linked to South African systems. All our operations are managed locally in Botswana,” Frith said in a statement.
He said GlenRand South Africa has been looking for suitable partner which can provide it with critical mass in terms of its members under administration, as well as the financial investment to allow that business to grow and return to profitability.
Frith further defended the move saying that the transaction would position the company as a leading Black Empowerment organization in South Africa and will give it the necessary fire power for growth going forward.
“In the light of the transformation taking place in the retirement fund industry with more reforms still to come, we believe that the new company will be very well positioned to become a leading player in the South Africa industry,” Frith said.
Over the years, GlenRand has accumulated losses of over R 80 million, a move which has sparked questions over the Bank of Botswana’s decision to give it such a huge fund to administer.
Market analysts said they were “surprised that an organization of Bank of Botswana standing “could have given such an ailing company P 142 million of its employees retirement packages.”
“I find it surprising that the Bank of Botswana gave a company such as GlenRand such a big fund to administer. This is a company with a history of corporate failure but which was given such a huge fund. It has been making losses for years and now is being sold for R1.
Clearly, one wonders as to whether there was any due diligence before it was given such a huge fund,” one analyst said last week.