Afinitas delisting swindle
• Afinitas exits Ethiopia after investing nearly P30 million of pensioners’ funds • Shareholders who invested P90 million will be bought out at P15million
After raising about P94 million from investors through listing on the Botswana Stock Exchange Limited (BSE), Afinitas Limited revealed that maximum cash payout to shareholders in the course of the astonishing delisting is about P15.5 million.
On 5 March, 99.4 percent of shareholders voting at an EGM approved the delisting of Afinitas Limited from the Botswana Stock Exchange together with an Exit Opportunity of a price of about 90 percent of the listing price of P1. Afinitas disclosed that if all eligible shareholders availed themselves of the Exit Opportunity, the maximum cash impact on the Group would be a cash outflow of USD1 394 318 (P15.5 million). “The Group has sufficient cash resources to meet this potential outflow and to continue to operate for the next year without generating any further income,” Afinitas Managing Director (MD), Rupert McCammon, wrote in the group’s financial results for the year ended 31 December 2020.
Afinitas raised P2.7 million through an Initial Public Offering (IPO). Prior to that, Afinitas had generated over P90 million from fund managers, most of the funds being used being those of the Botswana Public Officers Pension Fund (BPOPF).
Afinitas resolved to delist from the BSE after COVID-19 had a significant negative impact on the financial performance of the Group. McCammon says last year they were able to announce a 72 percent growth in group revenue. “We had hoped to announce another substantial growth in income this financial year but the impact of COVID-19 has been felt particularly badly by the event, hospitality, travel and tourism sectors,” he said, adding that in common with many companies in these sectors, “our revenue experienced a massive drop as we were severely restricted from holding any physical events either in the UK, or across Africa”. The MD said there is considerable uncertainty as to when “we will be allowed to restart holding physical Africa business, trade and investment focused events within both the UK, or across Africa”.
Afinitas loss for the year amounted to P15.6 million. The operating entities within the Afinitas Group comprise Africa Events Limited, a 50 percent owned business focused on Africa business, trade and investment events, and Adventis Limited, a 66 percent owned specialist investment management company. Both investments cost $2.5 million (P27million) each. In addition Afinitas holds a 9.6 percent stake in Icecap Trust Holdings Limited.
Africa Events Limited was preparing to host its largest ever AFSIC – Investing in Africa event in May 2020. However, the arrival of COVID -19 meant that the event was unable to be held in 2020. AFSIC is now scheduled for October 2021. However, McCammon says a slow rollout of vaccinations across the world and travel restrictions that may be enforced by the UK mean that it is difficult to know with certainty whether physical events will be permitted in the UK at that time. “In prior years, the event had gained considerable momentum and is increasingly recognised as one of Africa’s most important investment events,” he says, adding that “we were also unable to host any business, trade or investment missions in Africa during the year”.
The group believes that the Adventis investment team contains some of the most experienced investors in Africa. The company offers pan-African debt and equity investment products to investors looking to increase their exposure to Africa. “Our belief is that African debt and equity products look increasingly attractive both from a valuation and risk perspective relative to alternative investment opportunities in the world,” the MD says.
Adventis was in the midst of encouraging discussions regarding potential investments into its investment products. However, these discussions were delayed by the advent of COVID -19 which caused significant market turbulence and uncertainty globally, McCammon says, adding that these discussions have restarted, and “we continue to be positive that some of these discussions may convert into investments into Adventis products during this financial year”.
For Ethiopia Investments Limited, the group says the focus had been on the development of EQOS Services, the company’s majority owned business process outsourcing company based in Ethiopia. Prior to COVID -19, EQOS had been showing signs of growth in business income, according to the company. However, McCammon says when COVID -19 hit, the consequent economic collapse of developed economies meant that a number of its most important clients cancelled their contracts with EQOS.
“In addition, we were undertaking BPO work within Ethiopia where we were unable to access clients’ offices and complete contracted work due to the lockdown.” As a result, and bearing in mind the impact of the group no longer generating revenue from the event business due to COVID -19, McCammon says a difficult decision was taken to close EQOS Services in order to preserve Group cash, adding that the group will exit Ethiopia as a result.
Icecap Trust Holdings Limited is a minority investment (9.6 percent shareholding). The group says the company, which provides trust, company and administration services, continues to focus on growing revenue. “In common with many businesses globally, COVID -19 had an impact on Icecap’s ability to generate new business. However, we expect continued revenue growth in the coming year and a move towards cash breaking even,” the company says. “Due to the continued impact of COVID -19, the board will continue to look at all strategic options to keep our costs as low as possible, while identifying new business opportunities that may arise because of the global pandemic.”