Tuesday, March 21, 2023

BPOPF’s move shocks financial market

The Botswana Public Officers Pension Fund (BPOPF) threw the financial market into a state of “shock” last week as it unceremoniously terminated its contract with African Alliance Botswana.
The move set in motion countless allegations, some of which point to the involvement of the Central Bank in the whole saga.

“There is a big fight among the people at the top (influential people) in this country. We are under pressure from the Central Bank, which is complaining as to why we still give African Alliance and Bifm ( Botswana Insurance Fund Management) mandates to manage our funds while they do not have the capacity,” well placed sources at BPOPF told The Sunday Standard.

“They are saying we should be giving mandates to some international fund managers who are managing the foreign reserves,” said the sources. “I don’t know why they can not leave us alone so that we can concentrate on creating value for our members.”

African Alliance is a fund management firm, with an 18 percent stake owned by Loius Nchindo and a group of other Batswana while the rest is held by the South African-based Tony de Castro family.
The company operates in 19 African countries.
By Monday last week, when African Alliance Botswana was notified of the termination of the contract without prior notice, the company had assets to the tune of over P 6.5 billion under its management.

The bulk of the assetsÔÇö totaling 92 percentÔÇö belonged to BPOPF, a mandate which it had since the inception of the scheme in 2001. The company was instrumental in growing the pension fund industryÔÇöbenefiting 110,000 individuals ÔÇö from P 9 billion in 2001 to P 30 billion to date.

According to Alexander Forbes Botswana, the BPOPF fund administrators in their quarterly survey of portfolio managers in the country, including those who do not have BPOPF mandate, African Alliance was the second best performing assets management firm in the country.

For the 12 months to end of December 31, 2006 its return on investment stood at 34.85 percent, coming closer to Investec Assets Management at 35.7 percent and Fleming Assets Management at 37.8 percent on listed companies. And, on average, over the last three years its return on investment stood at 24.46 percent, according to Alexander Forbes.

Alexander Forbes further pointed out in the footnotes that African Alliance’s figures could have been much better if it had received contributions for December 2004 and January 2007. Further, its investment into Mascom was not factored because the company is not listed, but, sources close to Mascom said, the cellphone network could be worth as much as P 3 billion.

African Alliance controls a big stake in the cellphone company whose value could be as much as P 1 billion. It is believed that if Mascom is factored in, African Alliance would be ranked number one on the long term given the rapid value of the network company.

Claims of an intense lobby to get international fund managers to BPOPF purse started to surface in February this year when some members in the fund management industry ÔÇô including those still waiting to be given slice tipped the The Sunday Standard about the move. They expressed their concerns about fund management companies which they said “do not have postal addresses in Botswana let alone offices” trying to use their influence to get mandates to manage BPOPF.

The pension industry is the largest fund outside government and the Central Bank and is also lucrative because it is the fastest growing in the country. It also beats the foreign reserves in terms of growth. The BPOPF fund constitutes 80 percent of the P30 billion of the pension funds in the country.

This week’s alleged push to take BPOPF to foreign managers coincides with an explosive story where Capital International, the US-based fund management company, which is a long standing Bank of Botswana’s foreign reserves manager, is said to have lost over US $ 70 billion in its investments- prompting five big clients to dump it.
Chuck Freadoff, spokesman of Capital, told the international media last week that “the group has underperformed in its emerging market sector from 2002 to 2004. The group took action and performance in emerging markets improved, but the international fund performance slipped.”

However, on Friday night, the spokesperson of the central bank, Chepete Chepete, said he was “not aware of the alleged campaign staged by the central bank” in a bid to push BPOPF to foreign fund managers.

African Alliance Chief Executive Officer, Don Gaetsaloe, said in a muted statement Friday night that his company, its directors, management and staff have been under a barrage of “unfounded allegations that are damaging to the reputation of the firm.”

Some of the allegations were made by ex-employees but they were found to be baseless following external investigations.


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