Stanbic Bank Botswana has no immediate plans to list on the Botswana Stock Exchange, bank Chief Executive, Leina Gabaraane, has revealed.
Gabaraane told this publication that they don’t have an appetite to list on the local bourse as the current situation does not attract them to do so.
“As we stand now there is no immediate plan to list. There are many factors that we need to consider before listing and none of them has met our requirements. One of them is to raise capital and we don’t need to raise capital,” said Gabaraane.
He said the bank was performing well on the local financial service market and will continue to do so without listing. “We believe that our contribution to the financial services sector in Botswana continues to be in existence and will continue and we don’t need to do it through listing,” he explained. He said listing on the stock exchange is important and this is why their bonds are listed on the BSE.
Listing on the stock exchange is said to be the best platform for citizens to participate in the businesses operating in the country through buying shares. There has been calls by some analysts for the bank to float its shares on the BSE, with emphasis placed on its market share. Even the central bank has also made similar calls.
“Unlike its peers, Stanbic is not listed on the Botswana Stock Exchange. The non-existence of the bank on the domestic bourse could be misinterpreted to mean lack of long-term commitment and willingness to have the Botswana public participate in the ownership of the bank,” said Bank of Botswana Governor, Moses Pelaelo.
He was speaking at the bank event to market its 25 years of existence in Botswana some few months ago. Ben Kruger, the co-Chief Executive of parent company, Standard Bank has told Botswana Guardian before that the time is not ripe for the bank to go public.
Stanbic bank is a member of the Standard Bank Group, the largest bank in Africa by assets. The bank is one of the largest and best performing commercial banks in Botswana. In its annual report for 2016, the financial institution recorded a profit after tax of up to 48 percent at P195 million.
The CEO said despite the closure of businesses, threats of closure and the challenges in the agriculture sector in the country, the bank still performed well. They recorded above budget profit and double digit year-on-year growth.
Stanbic Bank provides the full spectrum of financial services and operates within the two divisions namely the Corporate and Investment Banking (CIB) and Personal and Business Banking (PBB).
In Botswana, the bank employs over 600 workers and has a national footprint of 10 branches. Last year the bank successfully launched a new three year ‘Road To Excellence’ strategy aimed at enabling and positioning the bank as the market leader.
Letshego’s Chief Executive, Christopher Low smiled all the way to the bank last year, as the micro-lending titan rewarded the Brit with a mouthwatering annual pay totalling P7, 5million.
This is according to the group’s latest annual report, which among others covers the company operations and financial performance for the 12 months to December 2016.
Low, who has been with the company for about three years, was paid a total package of P7, 535,000 for the year under review. Botswana Guardian’s own calculation shows that, Low, a Chartered Accountant by profession, earned P627, 916, 67 every month.
That is if his management services, performance bonus and special incentive were paid on a month-to-month basis as a collective. Low’s total pay is more than the P6, 9million paid to the ten directors who made up the company’s board.
At more than P600, 000, 00 a month, Low has become the second best paid Chief Executive of a listed company, after millionaire and serial investor, Choppies Chief Executive, Ram Ottapathu. Ram earns nearly P1million on a monthly basis as the most senior executive of the BSE and Johannesburg Stock Exchange (JSE) listed retailer. The salary for Letshego’s boss, who has over 25 years in the financial services sector, is more than the P5, 7million he earned in 2015.
According to the annual report, Low’s salary was increased after his three-year contract ended in November 2016. A chart on the annual report shows that Low was paid P3,15million for ‘management services’, P2,885million as performance bonus and a special incentive of P1,5million, which brings the total to just over P7,5million.
His righthand man, Group Finance Director, Colm Patterson, was paid just under half of his total pay. The report, which is also available for investors’ perusal on the BSE website, shows that Patterson was paid a total package of P3, 087,000 for his services to the Pan-African micro-lending group.
Board members of Letshego, who are responsible for giving the company strategic advice, were also paid handsomely for their services. For example, former Chairman John Burbidge received just over P800, 000, 00 for his work for the period under review. This pay is what board chairpersons in other private companies and government parastatals can only dream of. Burbidge has since handed the baton to Chairman Enos Banda, who was only appointed to the board last August.
Letshego’s board also has former deputy finance minister, Dr. Gloria Somolekae as board member. The soft-spoken Somolekae was rewarded with nearly P600, 000, 00 for the services she rendered during the year under review. Somolekae sits in several sub-committees of the board such as human resources and strategy.
In the same board also sits former Botswana Insurance Holdings Limited (BIHL) Chief Executive, Gaffar Hassam who is now a senior executive at Sanlam. He was paid just over P500, 000 for his services. Unfortunately, his dues have been channeled to the company which he represents in the board, most likely BIHL which has shares in the company.
In total, the directors’ fees totaled P6, 9million. While Letshego which has a market capitalisation of P4, 7billion has paid its Chief Executive a performance bonus and a special incentive, its profit for the year (H2:2016) under review took a nosedive. The company’s Profit after Tax (PAT) stood at P948million, down by 9 percent year on year. This is despite advances increasing by 6percent to end the year at 7billion.
Writing in the same annual report, Low said the company will push its agenda of becoming a broad-based financial services company with focus in the African continent. “I feel confident that we have invested wisely in the critical elements to mitigate these risks: our people, our policy frameworks, our systems and our stakeholders,” he wrote. Chairman Banda pointed out that the group will also continue to drive the financial inclusion strategy. More investments will also be channeled to staff, technology and strategic partnerships.
“The Board of Directors is confident that the Group is well positioned to benefit from the growing markets in which it is active and views inorganic expansion via acquisitions as important to the acceleration of Letshego’s strategy,” said Banda.
Furniture group, Furnmart Limited has announced that it expects more than 10 percent increase in its half-year results ended January 2017 than the previous period. This will be good news to shareholders, who last year watched by as the BSE listed group closed its operations in Zambia among others stores, citing poor performance. However, it will seem the move was not a bad one after all, as positive results have started to trickle in.
In a published statement signed by Furnmart Managing Director D S le Roux, the company advised shareholders to exercise caution when dealing in its ordinary shares until announcement of the results is made. In the same period last year(H1:2016), the group recorded P4,4million as profit, a massive 89.3 percent decline in profits due to weak currencies in South Africa and Namibia. Revenue for the previous period amounted to P622.2 million, a decrease of 5percent while the operating income of P75 .1 million was 1.3 percent lower than the prior period.
Furnmart Limited retails domestic furniture and electrical appliances through its network of stores in Botswana, South Africa and Namibia.
In the 2015 annual report released last year, the group said it expects trading conditions in the region to remain subdued for the foreseeable future.
“The economies in the region continue to be impacted by high unemployment, low consumer confidence and high levels of indebtedness.
“Maintaining real sales growth will present challenges in the short term especially given the group’s stricter credit granting criteria,” stated the management report. However, the group said despite the negative economic outlook, management believes that opportunities still exist for growth.
“The group will continue to invest in new stores in the region,” it said adding that many of these stores will be in South Africa. “The group will however be very selective with site location and capital commitment,” states Mynhardt in the report.
RDC Properties, the leading property company this week disclosed that it will increase its investment portfolio as the group continues to record increased profits in a challenging market. Speaking at the company’s financial results to December 2016, Executive Chairman, Guido Giachetti said the environment is ripe for them to start rolling their projects in the medium to long term. “We have not started it yet but we have a strong focus in Botswana market. We are looking at increasing our portfolio as a whole in Botswana because our investment is well positioned in the country,” he said.
He said they are currently working on the residential market in Botswana and looking for acquisitions in the region. “To expand our portfolio we are working on developing residential houses in Botswana and in the region we are looking for acquisitions for further developments,” said Giachetti.
RDC completed the refurbishment and rebranding of the Masa Square hotel in Gaborone last year and is now fully operational with 30 luxurious Masa executive suites. The BSE listed company is building 45 residential apartments (a mix of one-bedroom, two-bedroom and lofts) in Gaborone which will be completed in the first quarter next year. “Gaborone remains the prime location for the group’s portfolio with strategy of regional diversification already in progress,” said Giachetti.
Presenting the group’s year end results on Tuesday, Giachetti said the completion of Masa suites as well as Masa Square Hotel refurbishment has added positively to the group. However, the group indicates that the Gaborone hospitality sector is facing increased development activities which might lead to risk of over supply in future.
The group recorded 24 percent increase in profits to P124.5 million for the year ended December 2016. Giachetti said the investment and property portfolio grew by 12 percent to P1.2 billion with the largest contributor being the Chobe Marina Lodge, which was independently valued this year.
“Contractual lease rental revenue improved by six percent, excluding the effects of the straight line rental adjustments. This growth is largely due to the performance of Chobe Marina Lodge,” said Giachetti.
In pursuit of their regional expansion, they have now secured sites in Namibia for the development of convenience shopping centres in Katima Mulilo and Tsumeb villages. Giachetti said the land allocation process is on-going in three other towns in Namibia and construction is expected to start within the next six months.
PrimeTime, a company with property assets around Botswana, is spreading its wings to Zambia, where it is expected to construct a multimillion Pula retail shopping centre in the coming months.
This week, the BSE-quoted company disclosed to unit holders that it has just completed the rights to lease a 1, 0246 ha land in the copper-country where the mall will be built. The centre, which will be based in Chirundi, will cost the Gaborone-based company a whopping P89, 2million. Company directors are thrilled that the deal which has been under negotiations for months will further create value for shareholders. “This transaction is part of the execution of PrimeTime strategy to continue growing and diversifying the property portfolio in order to create long term value for linked unit holders and will enhance the current geographical spread and mix of properties,” said the company in a statement.
Shareholders of the company will in a month’s time be called for a special general meeting to approve the latest development in a company with a market value of P548, 6 million. It will seem good times for the company are here. On Tuesday, Chairman Petronella Matumo issued a trading notice to the effect that year end results will be ‘significantly higher’ compared to the past year (H2:2015). For the year to August 2015, the company reported a profit of P60, 9 million, lower when compared to P65, 3 million made the year before.
According to the company director, the results are up due to sale of investment properties in the just-ended year. PrimeTime also carried fair adjustments on investment properties. The results will be announced sometimes next month. Some of the company property portfolios include Letshego Place, Ramotswa Shopping Centre and Nswazwi mall. On a related matter, the company opened the Pilane Mall, a mixed use mall in Kgatleng District. Ahead of the mall opening, there were pending licences that were due to be issued for its foreign tenants from South Africa.
Letshego Holdings, a micro-lending behemoth has reiterated its plans of becoming a truly inclusive financial services group within the continent, the head of its local subsidiary has disclosed. Speaking on Tuesday night at a function for Botswana-Kenya businessmen and women, Letshego Botswana CEO, Frederick Mmelesi said their focus is clearly aligned at assisting low to middle income earners, who have been excluded by the financial system for years especially in Africa’s rural areas.
This is the plan that Chris Low and his executive committee will put much emphasis on going forward. “Through a broad-based financial services offering underpinned by innovation and an inclusive finance agenda, we work to deliver simple, appropriate and affordable solutions to empower fellow Africans who are typically underserved or unbanked,” Mmelesi told the event which was attended by business CEOs and diplomats from Botswana and Kenya respectively. The Letshego Botswana top executive, who has been with Letshego from day one, stated that one such example of financial inclusion is their low income housing finance offering.
The product is already a hit in Kenya, the biggest economy in Eastern Africa, where it has a portfolio of $20 million (P200million). The company has already started rolling the solution (low income finance product) to Botswana market and early signs show that demand will increase in the foreseeable future. Letshego Group Head of Corporate Affairs, Mythri Sambasivan-George said in an earlier engagement with BG Business. BSE listed Letshego, which has operations all over Africa, currently boasts a customer base of 300,000 borrowers and 100,000 savers. On another note, Mmelesi told the audience that, Letshego Kenya, which was opened some eight years ago, is the fastest growing subsidiary in Kenya providing credit services to small and micro-entrepreneurs, salaried employees, and civil servants. It was formally called Micro-Finance Africa.
Letshego, which will later this month (July) celebrate 18 years of existence, said its robust growth in Botswana and Kenya has been up-scaled by the healthy relations between the institution and governments of the two former British colonies. The Tuesday networking session also had speakers from Kenyan government. The function was done as part of a three-day visit to Botswana by Kenyan President Uhuru Kenyatta this week. During his stay in Botswana, Kenyatta, the son of founding President Jomo Kenyatta and his counterpart President Ian Khama discussed pertinent issues surrounding their socio-economic relations that span decades. The Kenyan President left on Wednesday morning.
Property company, New African Properties made history at the domestic market on Wednesday after trading shares worth P453 million.
This was the biggest trade in a single day since BSE started operations. NAP among others own Riverwalk mall and Kagiso Shopping mall. NAP has a market capitalisation of P1,7 billion. It closed Wednesday trading at 293 thebe. Acting BSE product Development Manager, Kopano Bolokwe said the second largest trade in a single day is currently being is held by Letshego, which traded shares worth P165,8 million in April 2011.
Speaking at an event on the same day to mark the celebration of the historic trade by NAP, Chief Executive of BSE, Thapelo Tsheole said the trade signifies the confidence that investors has on NAP and indeed BSE as the exchange house. “Such trading also helps improves liquidity,” added the BSE boss.NAP went public back in September 2011.
A stock exchange is a considerable reflection of a country’s economic diversity. As a pivotal institution in the national economy, the Botswana Stock Exchange (BSE) is a habitat to most of the economy’s powerhouses.
This can be noted from the several sectors of the economy that are represented by the companies listed on the BSE, their sizes and a vast range of businesses they are engaged in. At present, the BSE is a host to 22 domestic companies representing subsidiaries of multinational corporations as well as truly home grown companies.
In this count, the appeal is in the manner in which the homegrown companies have managed to pursue outward growth opportunities. Amongst the home grown companies, 12 companies have presence outside Botswana. Further, most of these companies have largely leveraged on the advantages presented by a listing on the BSE - of raising growth capital - to pioneer their regional expansion. Whilst some companies have raised capital through an IPO, others have utilized avenues such as rights issues and issues for cash to fund growth initiatives.
One of the BSE veterans, by virtue of being one of the first 5 companies to have listed on the BSE in the formative year of 1989, Sefalana, has operations across 2 more Southern African countries (Zambia and Namibia) in addition to diversifying the Group’s business operations locally over the years. Indeed, the Group has made use of an assortment of funding options available on the BSE, such as rights issues and issues for cash, to enhance its coffers in funding regional expansion. Along that trajectory has followed several other companies that recognized the opportunity to expand their consumer markets beyond Botswana’s 2 million people.
A distinctively aggressive Sub-Saharan expansion drive by any BSE listed company has been by Letshego which has expanded from Botswana into East Africa (Uganda, Tanzania, Rwanda and Kenya), Southern Africa (Lesotho, Mozambique, Namibia and Swaziland) and has recently completed its entry into West Africa (Nigeria). All of these regional subsidiaries commenced after the company listed on the BSE in 2002, with the first one commencing in 2005 in Uganda.
Furnmart, which listed in 1998, has transitioned not only in the spread of consumer segments it caters for but also in its footprint across SADC (South Africa, Namibia and Zambia). It is also worth noting that Furnmart has in some cases made use of rights issues to fund new stores during its expansion.
RDC Properties, listed in 1996 and currently operating in Madagascar, recently undertook a rights issue on the BSE to expand into South Africa, Mozambique and Namibia. Similarly, other property companies have steadily expanded their operations beyond Botswana and particularly post listing, into regional markets; Turnstar (listed in 2002) is present in Tanzania; New African Properties has since expanded into Namibia since listing in 2011 and PrimeTime ( listed in 2007) now has properties in Zambia.
Subsequent to its listing on the BSE in 2012, Choppies has since penetrated South Africa, Zimbabwe, Zambia and Kenya. Cresta (listed in 2010) leveraged on its profile to attain funding for growth opportunities beyond Botswana and entered Zambia in 2012 through credit. Wilderness (listed in 2010) operates in 7 other countries and Chobe (listed in 1999) owns a subsidiary in South Africa.
Perhaps a distinctive transaction in respect of regional expansion and as such worthy of note is the intended acquisition of a stake in a company listed on the Malawian Stock Exchange by Botswana Insurance Holdings Limited (listed in 1991). This is the first time that a BSE listed company has intended to pursue growth by investing in a publicly quoted company across the border.
Why is it necessary to narrate all these growth stories?
The fundamental message from the preceding is that the BSE provides a platform for companies to catalyze their growth and create value for shareholders.
An array of funding options available to BSE listed companies is perhaps the single biggest catalyst of growth. Whilst these companies are well established and profitable with sizeable earnings, they tend to augment their coffers through corporate actions which are not readily accessible, at a relatively cheaper cost, to unlisted private companies.
It has to be hammered home that a company listed on the BSE has a much appealing profile than a similar unlisted company. This deduction follows as a result of the perception associated with the company’s conduct in relation to corporate governance. This feature feeds directly into the possibility of accessing funding at a reasonable cost. Moreover, once a company is listed it benefits immensely from its broad shareholder base in meeting its capital requirements through rights issues, issues for cash and even re-investing capital that could have otherwise been paid as dividends.
The message to unlisted companies, their founders, directors and management is that companies in Botswana need to see value in diversifying their revenue sources across different geographies.
In the wake of private sector being positioned as a driver of economic growth and economic diversification in Botswana, dependence on Government spending has to be diluted by other revenue streams. Botswana is known for its small population, and consequently its small capacity to absorb domestic products and services.
However, it has been demonstrated by majority of BSE listed companies which utilized the home base for raising capital that Botswana companies can successfully explore the abundant business opportunities in Sub-Saharan Africa. The demographic edge, economic growth, improving political stability and ongoing investments in infrastructure are opening up previously inaccessible markets across Africa.
* Kopano Bolokwe is BSE Acting Product Development Manager
The BSE will host its Inaugural Listings Conference on 10th March 2016 at the GICC under the theme “Opening the BSE to the Business Community – Creating Value through Listing”. The Conference features a presentation by Ms Celeste Fauconnier, Africa Analyst at Rand Merchant Bank South Africa, on the subject of “ From Botswana to Africa: what are the opportunities for local companies expanding into Africa”.
Botswana Stock Exchange (BSE) intends to optimise Botswana’s competitive advantages by establishing Botswana as a regional financial hub, BSE Chief Executive Officer, Hiran Mendis revealed this week.
Mendis who will be departing end of this year as his contract comes to an end said, “The strategic intent is to position the BSE as a gateway to regional and international financial markets given its many competitive advantages.” According to BSE boss, the strategy underscores the need to utilise the BSE as a platform for the trading of international financial instruments. Following the main committee’s approval in January 2015 to explore this initiative, BG Business understands that BSE has commenced discussions with institutions that could assist in this venture.
“This initiative will assist local fund managers optimise risk and returns given that Botswana presently exports 60-70 percent of contractual savings without creating value locally,” said Mendis. Currently the local bourse is faced with challenges mainly lower levels of liquidity, fragmented bond market as well as low levels of financial literacy and awareness about the stock market.
Although liquidity is low at the domestic bourse, Mendis noted that it has however tremendously improved in the last three years. Much of the improvement is primarily attributed to the introduction of automated trading system in 2012. BSE has developed strategies aimed at improving and sustaining high levels of liquidity such as market education, attracting companies to list and introduction of new instruments to invest in. As for the bond market, trading of bonds is fragmented resulting in inefficiencies in pricing and access. The BSE’s initiative will centralise the trading of bonds and provide a means for deepening the capital market.
Moreover, retail investors will be provided an opportunity of accessing the stock market for the purchase of bonds. “Retailers have shown much appetite in investing in the capital market,” Mendis highlighed. Much like the impact that the automated system had on the development of the equity market, centralising the trading of bonds using the infrastructure of the BSE and Central Securities Depository Botswana will result in improving the liquidity in the bond market and make bonds accessible to retail investors. It would be possible to introduce repurchase agreements as a future development in order to enhance liquidity of the bond market.
Letshego Holdings Limited will continue to push more deals through brownfield model, as it works well for the company at the moment, its Chief Executive Chris Low has said. The micro-lending titan is currently chasing two deals in the continent, being Nigeria and Tanzania.
All the deals are being pursued through third parties, which suggests once such deals are sealed, the Botswana Stock Exchange (BSE) listed company will have to pay whatever such parties will have agreed, as opposed to starting new business from scratch. “Brownfield model allows us to enter any market more quickly. In other countries, it can take months before we are granted a trading license. If we buy, we are sure we will inherit existing market with existing clients,” said Low during a recent media briefing. Letshego was formed as a greenfield project 17 years ago in Gaborone, before expanding its financial services into the African market.
The company is now seeking to enter the continent’s biggest economy-Nigeria. If it gets the nod, the company will acquire 100 percent of a depositing taking institution in Africa’s most populous nation.A similar deal is currently being pursued in Tanzania. Letshego is waiting for regulators to give the two deals the go ahead. Low said the above deals would be funded through existing cash reserves. Other external funding options will be exercised when the need arises, said Low. “In recent years, Letshego has diversified its sources of funding to include development finance institutions (DFIs), commercial banking, our medium term notes and investment funds,” the company said in its 2014 annual report.
On other matters, Letshego Botswana Chief Executive, Fred Mmelesi said going forward the company will work hard to help government push the ‘financial inclusion’ agenda. “Financial inclusion is a topical issue in Botswana and elsewhere,” explained Mmelesi.
The micro-lender will use other methods such as electronic channels to help those excluded from the financial system. The company will also be flexible, said Mmelesi. Small to medium enterprises will also be assessed on their merits to get the necessary financial assistance they need.