Sunday, April 5, 2020

Deutsche Bank lands Bifm support in setting up mining fund

Deutsche Bank, one of the top European banks, is pledging to stand shoulder-to-shoulder with Bifm Capital in the setting up of the trail-blazing Africa Mining Fund which will operate from Gaborone.

The mining fund is aimed at investing in mining companies the majority of whose assets are based in Africa and is scheduled to be launched during the first half of the second half of this year.

Among the top companies which are giving the support to the mining fund are Botswana International Financial Service Centre (IFSC), SRK ÔÇô the world’s largest mining consultancy, UK’s Loebaarn, which specialises in providing services work in niche mining activities and Capital Securities.

“We want to take it (Botswana ÔÇôAfrican mining fund) to another level. The guys are very excited about Africa-based mining fund,” head of Bifm Capital, Rhys Carr said in an interview with The Sunday Standard. “J P Morgan and other big banks are also interested,” he added.

“We got a lot of support from Botswana IFSC and now the aim is to register with the Bank of Botswana. We think that that would be a smooth process since IFSC is on our side. The Ministry of Finance and BURS are also supportive,” he said.

The Botswana Africa Mining Fund, which will be domiciled in Botswana and registered as a public company, is expected to source investment from both local as well as foreign investors.
“With Deutsche Bank, we are trying to develop the Africa mining index which in the initial stages ÔÇö two-to-three years ÔÇö will operate over the counter. Depending on its performance the intention is to ultimately list it,” Carr said.

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.

The Fund will be registered with the Bank of Botswana as a Collective Investment Undertaking (CIU) in the next coming week. It is anticipated that the Fund will be capitalised between US$50 million to US$100 million, and will 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 in this economy chasing after limited investment opportunities 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,” Carr said. 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. The Fund 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 largely aided by China and India’s economic boom.

Bifm Capital (Pty) Ltd is a subsidiary of Botswana’s biggest fund management company, Bifm, which is worth about P 12 billion.

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