Investors are jostling to contest for Botswana Public Officers Pension Fund (BPOPF)’s unprecendented P300 million private equity fund tender, which is expected to breath a new life into the asset management industry.
Newly appointed BPOPF chief executive officer (CEO) Boitumelo Molefhe expects the deal to be awarded by November this year after identifying a suitable bidder.
She explained, in a measured way, that her pension fund will engage in a strict vetting process to select fund and asset managers who satisfy their strict investment model. This is because BPOPF, the largest pension fund will not want to overexpose its investment to risks by awarding same companies management contracts.
She says the timeframe of awarding the tender shall be guided by the fulfillment of the technical evaluation and assessment during the tendering process. “The process also needs the approval of the board of directors as well as BPOPF investment committee,” she said.
She was cautious however – that BPOPF needs to find the right fund manager to minimise investment risks and ensure that returns are made – when asked to identify fund manager seeking to manage BPOPF funds.
Further, it seems the pension fund, with assets of about a third of the gross domestic product (GDP), has been having a hard time awarding the tender.
The P300 million tender is a second batch of the P800 million which BPOPF launched last year to be invested in Botswana. The PEF, was launched after BPOPF begun showing interest in offshore investment and responding to pressure that too much of its money was offshore while Botswana also has investment opportunities.
The structure of BPOPF’s investment portfolio was that 70 percent of its capital was invested offshore while only 30 percent was invested in Botswana. The new strategy plans to turnaround the investment ration, however.
Around September last year, an P800 million PEF was launched, but the first batch of P500 million was clinched by Capital Management Botswana (CMB), formerly known as Capital Management Africa under the ownership of Rhys Carr and Timothy Marsland. The then interim BPOPF CEO mentioned that the remaining P300 million, was out and expected to be awarded and publicised before the end of 2014.
It was expected as per BPOPF announcements that after the PEF, an infrastructure fund will then be launched. However, nine months after the award of the first tranche of the P800 million PEF, BPOPF awarded Flemming Asset Management a P300 million infrastructure fund.
The investment is said to be used to construct a 148 roomed 5 star hotel in the Central Business District (CBD), in partnership with M3 (Pty) Ltd, Hilton Brand Worldwide and Flemming Asset Management.
The delay in awarding the second batch of the PEF has not been made public.
However, the tender was floated this week with a closing date of 9th October 2015. It remains to be seen which company will emerge victorious, but expectations are that there will be a cut-throat wrestle for the lucrative contract.
Last year, when the first tranche of the P800 million fund was floated, 30 companies showed interest and 13 of them managed to pass the first stage of the tendering process.
However only 3 companies, Capital Management Botswana, African Alliance Botswana and Venture Capital Botswana managed to make it to the final stages of technical assessment and evaluation before the BPOPF gave the tender to Capital Management Botswana.