The Botswana Public Officers Pension Fund (BPOPF) has attributed the rise in its local property acquisitions to a decision made a few years ago to increase the number of direct property asset managers.
Over the past two years, the country’s largest pension fund has expanded its footprint in the local property market, securing several acquisitions that have been approved by the relevant authorities.
In December, the Competition and Consumer Authority (CCA) approved the acquisition of 84 units in Seriti Estate, Mogoditshane, from Babereki Enclave (Pty) Ltd. This was the latest in a series of acquisitions that took place last year.
Alan Ranthepha, Director of Corporate Communications at BPOPF, explained that local direct property is a key component of the Fund’s broader investment strategy, with a designated budget allocated for this asset class.
“Asset managers are then appointed to manage property investments on behalf of the BPOPF,” Ranthepha said in an interview.
He added, “You may have seen more activity recently in terms of property acquisitions. This is not a result of a change in strategy, but rather a decision made by the BPOPF a few years ago to increase its direct property asset managers from one to four.”
Previously, the BPOPF had only one asset manager, Messidor Investments.
Ranthepha emphasised that the increase in asset managers was necessary as the Fund expanded and to foster competition, which ultimately leads to improved returns.
According to BPOPF, this process was driven by the understanding that investing involves both risks and rewards. The larger the risk, the greater the potential for significant returns on invested capital.
“Intuitively, we understand that to achieve higher returns, we must accept greater investment risk,” the report stated. “This aligns with the increased risk budget the Fund currently has, which has been expanded across the Active & Deferred Portfolio, With Profit Portfolio, and Nonprofit Portfolio.”
“Such risks are always measured and managed,” the report continued.
Ranthepha noted that the Fund does not focus on any specific sub-sector of the property market.
“The Fund does not have restrictions on property sectors, as long as there is reasonable diversification within the portfolios,” he said.
Currently, the total value of the Fund’s property investments amounts to approximately P2.4 billion.
Ranthepha also explained that BPOPF’s investments in cash fluctuate significantly since cash is the most liquid asset class from which investments are made and claims are paid.
“On average, the Fund aims to keep cash investments under 2 percent of its assets,” he added.
In 2023, the Fund had Assets Under Management (AUM) totaling P95 billion. Local listed equities accounted for the largest share, representing 29 percent, or P13.8 billion, followed by unlisted investments at 28 percent, or P7.5 billion.
According to the Fund’s most recent annual report, BPOPF has made a deliberate effort to diversify its portfolio across various asset classes, particularly within the local market, to ensure long-term sustainable investment returns.
The Fund asserts that increasing investments in unlisted assets provides diversification benefits for its members while contributing to broader economic development.
BPOPF’s unlisted portfolio consists of investments in property, hedge funds, project finance, and private equity. These investments primarily focus on supporting whole or partial buyouts with the main objective of promoting shareholder-level transformation.
