Grit Services which is LLR’s Africa expansion strategy partner, recently offloaded millions of its shares in the local group, cutting its stake from 25%to 18.31%. The pan-African real estate firm at some point held 30% equity in LLR, second only to founding shareholder, Botswana Development Corporation (BDC), with 40%.
Shareholder tensions boiled over in December when Grit tried unsuccessfully to adjourn the meeting, citing “an urgent, significant and material matter”. BusinessWeek has since established that shareholders were concerned about Grit’s control of the Africa strategy and its dominance of the board.
Presenting the financial results for the half-year ended December 31 on Wednesday, LLR CEO, Kamogelo Mowaneng, said the local property group is not 'tied' to Grit Services and can use other partnerships to push into Africa.
“When it comes into our Africa expansion strategy, we can use other partnerships which we feel are valuable,” she said. “We continue to explore pipeline opportunities locally and regionally in line with our Go-To-Africa strategy and our interest remain on value-accretive investments. “We normally identify strong partners who know those markets well.”
The CEO revealed that initially, LLR had agreed on moving to a 55% local and 45% African split in its portfolio. She, however, said the group annually reviews this strategy to see the relevance of the split, adding that LLR is driven by the opportunities that present themselves.
“When it comes to funding these investments, we do direct investment but this approach usually works better locally. “We are looking at various methods of funding the strategy,” she said.
At the AGM, the re-election of one of Grit’s directors on the Letlole board was rejected by shareholders, although the pan-African group still has three out of five seats after the meeting. Insiders previously told BusinessWeek that shareholders had questioned how the BDC, with 40% equity, did not have a seat on the board, while Grit at one point had four people while holding just over 20% equity.
On Wednesday, Mowaneng stressed that vacant board positions would be fully filled with new members by next month.
Currently, LLR’s biggest shareholder is BDC with 40%, the Botswana Public Officers Pensions Fund with 26.2%, Grit Services with 18.3% and others, including those on the Botswana Stock Exchange.
For the year to December 2022, LLR’s the value of investment portfolio increased by 14% to P1.4 billion, following the acquisition of a 30% stake in Orbit Africa Limited. The Kenyan deal, done alongside Grit, was LLR’s first expansion under the Go-To-Africa strategy.
For the reporting period, LLR’s profit before tax also grew by eight percent to P49.7 million.
“The company’s investment portfolio continues to generate strong cashflows and has supported the solid financial performance of the company in the first half of the 2022–23 financial year. “This is underpinned by medium-term leases and the good quality of our tenants, as well as the strong demand for warehousing spaces, which has effectively resulted in very high occupancy levels,” the CEO said.
