Monday, September 21, 2020

VPB to net another portfolio

The country’s largest private equity firm ÔÇô Venture Partners Botswana (VPB) ÔÇô is optimistic of netting a more lucrative fund.

This follows the depletion of the first US$40 million fund, which they managed on behalf of the Citizen Entrepreneurial Development Agency Venture Capital Fund (CVCF). The fund has been depleted for some time now but appetite from project promoters proved insatiable as more and more proposals were forwarded to them.

“We continue to receive and review proposals. We have a pipe line of projects lined up,” said the Managing Director of VPB, Anthony Siwawa. Fortunately, for those who made funding requests, it would not be too long before they are answered.
“We are in the process of finalizing the details of managing another fund,” confirmed Siwawa.
Details of the new fund are as now still sketchy; both the size and duration are unclear. At least VPB is confirming advanced negotiations to that effect.
“The new fund would be a combination of both local and international investors,” that is all Siwawa could reveal.

At the just ended Africa Venture Capital Association (AVCA) conference in Gaborone, The Sunday Standard learnt that fund management firms have expressed commitment towards domiciling some of their funds in VPB. It is said that Botswana Public Officers Fund (BPOPF) is likely to dominate the domestic investors’ portfolio under the new fund. In the recent past, there has been a lot of cry about the lack of homage in the country for over P36 billion of BPOPF, with approximately 30 percent of it being invested outside the country. Now there is bound to be a paradigm shift, buoyed by the success of CVCF under the management of VPB. The CVCF is a 10-year portfolio and now remains with five years to go and, all ready, it has proved that such a vehicle was needed in the country.
Of the 18 projects that VPB had funded, only one faltered ÔÇô the famous Fabulous Flowers, which saw even major international financiers in the name of European Development Fund taking the knock.
“We still had confidence in the project and our view was that liquidation was not necessarily the best way to go. This is because all investors were sure not to recoup anything from liquidation,” explained Siwawa.

He added, “Our proposal was that the downfall of the project was managerial, so we asked other investors to convert their equity into shareholders so that we then continue the project under restructured management. In that way, we were all going to realize our returns.”

But, as fate would have it, they agreed to disagree ÔÇô with the majority investors having the last laugh. However, Siwawa is, in general, of the view that they are currently handling the government’s development skewed fund properly.

“We are sensitive to the needs of the government. We clearly understand the mandate of the government as you can even see in our allocations. We understand that government is more concerned with diversification, job creation and other such issues as citizen empowerment,” he explained.
Of the CVCF, they injected 50% into manufacturing (with the flagship being leather beneficiation), 19% financial services, 12% construction, construction and logistics getting 4% each and 3% going into agriculture. Of all the investments, 60% went into start ups, 19% were acquisitions, 13% funded expansions and 8% was injected into turnaround.
For the new fund, he said they would be able to accommodate its mandate, whether developmental or strictly commercial.

“Generally, venture capitalists are looking forward to investing in long term projects, which, in its own, has developmental aspects but they must in the process be able to generate commercial returns,” he noted.

He said flexibility in managing portfolios of different orientations is not an issue. If it comes to push, “we can even run a parallel fund.”

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