At its Initial Public Offering (IPO) in 2015, Afinitas Limited sold 91.2 million shares to a cluster investors including fund management companies for a staggering P94 million. Then, Afinitas said its business model would be profitable, but the company has since crumbled. The millions belonging to pensioners will never be recovered.

Executive Director of Afinitas Limited Leutlwetse Tumelo. (Pic:MONIRUL BHUIYAN/PRESS PHOTO)

Afinitas Limited listed on the Domestic Venture Board of the Botswana Stock Exchange in 2015 at a share price of P1 after allocating 2.746 million shares to the public through an Initial Public Offering (IPO). Prior to that, Afinitas had allotted 91.2 million shares to fund managers, raising about a cumulative P94 million.

Across the local asset fraternity, pension fund money was invested. By virtue of its size, it is also true that Botswana Public Officers Pension Fund (BPOPF) funds were also committed through fund managers invited by Afinitas at the time. Private placement results at the time showed that shareholding secured through private placement amounted to 42.63 percent.

The 2015 annual report released later after the listing indicated that African Alliance bought a chunk of the company’s shares on behalf of BPOPF. African Alliance held 60 000 000 shares or 28.04 percent of the company. BPOPF’s funds were also committed through Afena Capital (now known as Kgori Capital). Afinitas annual report showed that by end of 2015, Afena acquired a 6.17 percent stake, equivalent to 13,200, 000 shares. In total, the annual report showed that 73.2 million shares were held on behalf of BPOPF.

Explaining investment decisions to this publication this week, Sean Rasebotsa, the Chief Executive Officer (CEO) of African Alliance, said the assessment of “our investment team at the time of the IPO was that the potential return on Afinitas shares was commensurate with the assessed level of risk”. Rasebotsa says the success of the IPO, and the broad participation of the asset management sector in Botswana therein, indicated that this was a common view among asset managers at the time. “The investment was made on the basis of future economic value derived from the pipeline of identified investments and opportunities as presented at the time,” he wrote in a response to The Business Weekly & Review.

At Kgori Capital, Alphonse Ndzinge, the Managing Director (MD), supports this; “The investment offered upside to our valuation subject to the company being able to successfully execute its long-term strategy. As is the case with all the investment opportunities, we extensively reviewed the pipeline of proposed investments, the potential for growth, and the track records of the promoters for executing such deals,” Ndzinge says adding that this included due diligence visits to regional markets to review the investment opportunity. “As investment managers, we take pride in our role in supporting and developing the domestic capital market and evaluated the opportunity to invest.”

Both African Alliance and Kgori did not share specific details of how much was used to buy shares, citing client confidentiality.

Using the listing price as a guide, it would mean that P73.2 million of BPOPF’s funds was committed to the investment by the fund managers. However, it is important to note that in private placements, there are instances when investors get slight discounts.


By end of 2016, BPOPF’s investment had increased by an additional 1.6 million shares through Afena Capital, which by then had increased its stake to 6.91 percent. Between then and now, shareholding remained unchanged. As in the 2019 financial period, BPOPF through Allan Gray, held 74.8 million shares. Allan Gray inherited the shares after BPOPF terminated Kgori and African Alliance.

The investments held by Afinitas at the time of listing included a 50 percent shareholding in Africa Financial Services Investment Conference (AFSIC), the leading investment event for African financial services companies.

Afinitas’ listing was earmarked to raise funds in order to establish a number of new subsidiaries of Afinitas that would have a pan-African strategic focus, including companies focused on developing within their chosen sector or country and to facilitate acquisition of stakes in other companies through the issue of stock in the future.

At listing, the immediate pipeline opportunities included Ethiopia Investments Limited (a regional investment company), Adventis Limited (a regional asset management firm), and an African focused investment bank. Due diligence on the geo-politics of these markets were ignored at the time, says sources.

A total budget of $2.5 million was allocated for the new subsidiary in Ethiopia. A second budget allocation of $2.5 million, announced in August 2016, was earmarked for an Africa focused financial services company, Adventis Limited. A total of $5 million was therefore reserved as seed capital for these two greenfield companies.  

Afinitas expected to make money in London and Ethiopia. At the time of investment, Ethiopian economy was at 8 percent, one of the fastest growing in Africa. Afinitas, hoped to ride on the GDP growth and make more profit margins. Observers say Afinitas directors and fund managers may have had shortcomings in accurately conducting a proper due diligence to ascertain prospects of full penetration and sustainability in the Ethiopian market, considering the then prevailing geo-politics.  Sources point to a very complex political environment in Ethiopia at which success for a foreign company can depend on political will. It appears Afinitas underestimated that aspect, hence its complete failure to actually penetrate the Ethiopian market.

The failure in Ethiopia, narrowed Afinitas’ money making strategy to only the London-Africa conference, which according to experts, was a risk that Fund managers should have identified before pumping in pensioners’ funds. COVID-19 has since killed the conference. Afinitas can no longer make money and it looks like fund managers will never recover what they invested in, money which belongs to the pensioner.

Over the past five years, the Board and management of Afinitas say they have executed the stated strategy, broadening the geographic and sector focus of the Afinitas Group, albeit not without facing numerous challenges, from a decline in global investor sentiment toward Africa as an investment destination to political instability in Ethiopia and more recently the devastating impact of the COVID-19 pandemic. Sources say a proper due diligence would have long exposed especially the political atmosphere in Ethiopia and cautions investments would have been made then.

Losses at Afinitas are now piling up.

“Afinitas Group remains loss making and there can be no certainty when this trend will reverse,” the company’s directors said.


Afinitas issued a warning to shareholders that the loss for the financial year ended 31st December 2020 is likely to be 80­90 percent greater than the loss reflected in the comparative period to December 2019, which in number terms is an increase in the loss of between USD593 000 and USD667 000. The loss before tax for the period ended 31st December 2019 was USD741 000.

Directors say the COVID-19 outbreak has had a disappointing impact on the performance of the Group. “The impact will continue to be felt by the Group throughout 2021,” they said, adding that the Board is looking at strategic options to keep costs as low as possible during these uncertain times while identifying new business opportunities that may arise because of the global pandemic.  

The liquidity of and trading in Afinitas shares on the BSE since listing has been minimal with a total of only 50 days when trades took place for a total 2,123,767 shares and only three days in the past two years when 11,762 shares were traded. The company trades at 89 thebe, a discount from its listing price.

Early March, the board said it undertook a strategic review of the business and that following consultations with a key strategic investor, it has determined that it is in the best interests of shareholders that the company seek a voluntary delisting. Afinitas shareholders are given between 15 March and 16 April 2021 to opt to sell back their shares to the company.

Allan Gray, which holds 74,800,000 shares (representing 34.96 percent of the total shares in issue and 79.99 percent of shares owned by public shareholders) provided Afinitas with an irrevocable undertaking to vote in favour of the resolutions. BDO Wealth, who were appointed as the corporate financial advisor, have indicated that the fair value of the cash offer is US cents 1.49 (approximately 15-17 thebe). This offer price is a significant discount to the 89 thebe at which Afinitas is trading. This means that by taking the offer Allan Gray will realise between P11 million and P13 million from the shares.

Allan Gray Botswana MD, Phatsimo Ncube, explains that the fund manager made the decision to support the delisting of Afinitas because it is “our belief that the company is worth significantly less than the price our clients received for the delisting”. Ncube says they came to this conclusion by analysing each subsidiary of Afinitas to understand their intrinsic value. “Additionally, Afinitas as a listed entity has significant fixed expenses which we do not believe the company can sustainably support, given the scale of its current operations,” she says, adding that delisting will allow it to reduce its cash burn materially.

Other key shareholders of the company which stand to lose out include Investec, which had acquired a stake of 7.11 percent (15 218 304 shares) on behalf of its investors. Investec reduced this stake to 5.87 percent.  Sefalana Group Staff Pension Fund holds 1 149 200 shares, equivalent to a 0.54 percent stake. Breweries Pension Fund holds 1,487,385 shares while businessman Ramachandran Ottapthu holds a million shares.

The Business Weekly & Review spoke to the BSE which advised that in the same way that the bourse does not intervene when investments make positive returns, it does not intervene when there are losses. Afterall, this is expected when becoming a shareholder.  Thapelo Moribame, the Head of Market Development at the BSE, says no investor was used but each put their money in the company with expectation that the business would generate returns. “Returns are made through changes in price or payment of dividends, and the fact that no dividends were not paid does not necessarily mean that there have been no returns,” she wrote in response to this publication.

Moribame says the nature of the market is that if investors see value in a company, they may choose to invest to become shareholders of the company, based on their sole judgement of its future prospects. “Investing sometimes leads to gains and other times to losses. The role of the regulator (BSE) is to ensure that investors have a fair platform on which to take risks. 

“It is important to note that the BSE exercises its role to promote market integrity and confidence by ensuring that investors are given full information to make up their minds about which companies to invest in,” she says, adding that the BSE does not take a position on the merits of any investment but rather enables investors a chance to choose their investments on the basis of full available information. “Companies applying for listing need not have assets, depending on which board they are applying to list on.”

Key promoters of Afinitas who ensured a successful listing included the chair Lesang Magang, who is the Managing Director of Phakalane Estates (Pty) Ltd. The team included Executive Director Leutlwetse Tumelo, who has worked in both the capital market and resources sector in Botswana. At an average pay of $71 261 yearly, Tumelo is the son of Serwalo Tumelo who has a stake in African Alliance, which was the major investor among the fund managers. Asked about conflict of interest, Rasebotsa responded: “Serwalo Tumelo sits on the Board of African Alliance Botswana, which position is strategic in nature. Investment decisions, which are operational in nature for an asset management firm such as ourselves, sit purely with the investment team.”