27 Aug 2017

Botswana Public Officers Pension Fund (BPOPF) chief executive officer, Ms Boitumelo Molefe says they will announce three incubatees in the next quarter after the legal due diligence process is complete.

Speaking at a media brief on August 24, Ms Molefe said the three were among the 36 received bids for the Fund’s Incubation Programme Policy.

She indicated that in November last year, BPOPF board of trustees approved the Fund Incubation Programme Policy with the intention to develop local talent, improve diversification and impact meaningfully on the development of the industry.

She indicated that bid went through four stages which included Expression Of Interest (EOI), Request For Information (RFI), Request For Processes (RFP), presentation as well as legal due diligence.

The EOI review, she said was based on the existence of demonstrable, determinable and relevant experience, relative experience and knowledge (as judged against other respondents) and potential suitability of the candidates.

“The EOI process identified entities that were then requested to respond to a RFI.

The RFI covered areas such as proposed company structure and business issues, operations and product/mandate details,” she said.

She noted that after the RFI stage was the RFP stage that looked at execution and fund terms, team, organisational quality and other considerations.

Ms Molefe said all the firms that responded to the RFP were requested to present their value proposition and those that made it past the four stages would be subjected to legal due diligence.

Further, she said the rationale for an incubation programme policy included, among others, the fact that asset management business tended to be dominated by foreign major players in the industry.

“Start-up and smaller asset managers encounter barriers to entry which can inhibit competition and stifle potential growth.

Large institutional investors such as pension funds can go through an incubation programme, provide seedling capital, to enable the asset manager to build a verifiable track record,” she explained.

Again, she said the policy was open to all asset classes and qualification was based on 100 per cent citizen-owned companies, minimum of 50 per cent of senior management being Batswana, assets under management (AUM) less than P1 billion and to include a local skills transfer policy in place.

“In case of an exit of a manager, trustees will manage that for specified reasons including inter alia, loss of key personnel, poor returns, exposure of assets to excessive risk and graduation out of incubation,” she added.

She indicated that policy carried some advantages, which included stimulating the local economy including employment creation, developing local talent, creating competition and diversifying the investment philosophy.

On the other hand, she said incubation programmes risks included limited track record of the incubation managers, key-man risk and staff retention, the need for individuals to multi-task (no ‘room’ for large organisational structures), systems and processes might not be as mature, low profitability and therefore viability when AUM is too small and inability to attract other clients because of lack of track record and teething problems.

On other BPOPF developments, Ms Molefe said the fund had, among others, recently acquired 23.85 per cent of Airport Junction Mall as well as a new asset consultant Riscura, who commenced work on June 1 this year. End