BPOPF shakes up capital markets
Brian Benza | Friday December 9, 2016 18:00
In a pioneering and valiant bid to see more Batswana owning more shares in fund management businesses as well as more citizen managers in such firms, the BPOPF will from next year only hand new mandates to managers that have a 25% citizen shareholding, 50% local representation on the board and 70% citizen participation in executive management.
In addition, the BPOPF will also fund start-up asset management companies owned by Batswana to the tune of P500 million as seed capital in a bid to see more citizens venture into the lucrative investment management business.
From its P55 billion assets under management, the BPOPF has 42% (P23 billion) invested in Botswana’s stocks, bonds and property through different asset managers.
Because of the size of the Fund, clinching mandates from BPOPF has proved to be a cash cow and the main sustenance for the bulk of the local fund managers with their management fees ranging between 0.8 to one percent of the mandate size.
But with the kicking in of the new rules next year, it will no longer be business as usual in the industry, where the majority of players are owned by foreign entities.
Although she says about 80% of their managers are already in compliance with the new guidelines, BPOPF CEO, Boitumelo Molefe says the 25% is just the starting point in the pursuit to see more Batswana involved in the industry through either direct shareholding or management control.
“The 25% is just the starting point, going forward the plan is to continuously review the threshold upwards. The intention is not to discriminate against anyone but to empower citizens. We have a lot of talented citizens that are doing most of the work for fund managers but are not appropriately remunerated.
“In the end we see most of the profits from BPOPF funds being taken outside the country,” she said.
Mandates for the bulk of BPOPF’s fund managers end around February 2018 and the expectation, according to Molefe, is to have them comply before they can be re-engaged.
“If a newly mandated fund manager doesn’t comply in the first year, we will reduce the size of their mandate by 10% and if non-compliance stretches to the second year, then the BPOPF will withdraw the mandate totally,” she said. Some of the current biggest beneficiaries of BPOPF funds include BIFM, Investec, African Alliance and Afena Capital, which stands out as the beacon of what BPOPF is trying to achieve as the company is now 100% citizen owned.
Under the incubation policy, Molefe said they would seek to handhold fledging companies that have less than P1 billion in assets under management, but have 100% ownership and at least 50% local senior management.
“The programme is open to all asset classes and the eventual aim is that the businesses can stand on their own and compete in the big league while also transferring skills to locals,” she added.
Other new guidelines that the BPOPF is introducing in a bid to encourage skills transfer, include local procurement of goods and services such as back office services like performance reports, accounting and compliance, and HR services.
“We have seen instances where the feedback reports we get from our fund managers are complied outside the country including other back office functions such as accounting. We need such services to be done here in Botswana so that skills are transferred to locals,” she said.