African Alliance: ‘Fall Guy’ in BPOPF/Choppies war
While BPOPF still won’t say why it terminated its contract with African Alliance, industry experts see it as punishment for betrayal after the asset management company voted as it saw fit at giant retailer Choppies’ extraordinary general meeting in September that saw ‘unwanted’ chief executive Ram back in the saddle with a whole team of his allies on the board. KEABETSWE NEWEL reports
Botswana Public Officers Pension Fund (BPOPF) does not owe African Alliance any explanation for terminating its investment mandate worth just under P5 billion, the Director for Investment and Portfolio at BPOPF, Moemedi Malindah, has said.
In an interview with The Botswana Gazette, Malindah said the contract between BPOPF and African Alliance gives the Fund powers to terminate the mandate without giving any reasons. It emerges however that the boardroom wars between Choppies Enterprise Limited and BPOPF are at the heart of African Alliance’s loss that included P407 million mandate in local cash, P2 million in local fixed income and P4.25 billion in local listed equities.
Investigations by this publication point to a tumultuous relationship between BPOPF and African Alliance that ended with BPOPF suddenly terminating its contract with African Alliance without advancing any reasons or offering any room for discussion prior to the decision. The CEO of African Alliance, Sean Rasebotsa, has confirmed the termination and that no reasons were advanced.
However, information reaching The Botswana Gazette is that BPOPF Chairman Solomon Mantswe terminated African Alliance’s mandate through a terse letter dated 16 October 2019. ‘‘The conditional award of mandates per our correspondence dated 10 April 2019 are hereby withdrawn,” sources quote Mantswe’s brief letter as saying.
According to insiders, the six-month relationship was terminated to ‘punish’ African Alliance for failing to give its full support to BPOPF during elections at Choppies’ emergency general meeting (EGM) in September.
Prior to the EGM, BPOPF is alleged to have summoned its asset managers to understand their positions on election of directors on to the Choppies board. It was at this meeting that BPOPF is said to have instructed its asset managers how to vote at the EGM. While African Alliance reportedly voted according to BPOPF’s instructions only in as far as their obligation to BPOPF is concerned, they extended the same respect to their other clients who had wanted a different vote from that of the BPOPF. Insiders say this is what earned them the wrath of BPOPF which had wanted nothing less than 100 percent loyalty.
According to pundits, African Alliance also stands wrongly accused of defying BPOPF and voting against the postponement of the EGM as it believed there was urgent need to go ahead and reconstitute the Choppies board, much to BPOPF’s chagrin. The EGM went ahead and ensured the return of Choppies CEO, Ramachandran Ottapathu, and his preferred board while ousting board members allegedly preferred by BPOPF.
It also foiled a pending disciplinary hearing against Ottapathu, who is better known as Ram, and supported by BPOPF. This enabled Ram to emerge victorious, reaffirming his position on the board and purging the likes of Wilfred Mpai and Dorcas Kgosietsile, who were reportedly preferred by BPOPF. BPOPF’s chief executive Boitumelo Molefe has been quoted in the media casting aspersions on Ram and his newly elected board, lending weight to suspicions that African Alliance has been terminated solely for the ‘minority’ vote it advanced to Ram and his new board.
However, insiders say African Alliance’s alleged swing vote was an insignificant vote and cannot by itself have frustrated BPOPF’s plan to oust Ram and his allies. African Alliance is said to have used the 0.61 percent that it held on behalf of other clients to vote as it saw fit for their best interests. Experts say the 0.61 percent could not have been a swing vote as Ram had won with a large margin of 4.15 percent. They contend that African Alliance did nothing wrong by voting the way it did with regards to its remaining mandates that also held Choppies shares.
Whatever the true motive of BPOPF, given the value of the terminated mandate, African Alliance cold soon find itself struggling financially. In the aftermath of this loss, a restructuring that would lead to job losses at African Alliance is looming.