Afinitas, an IFSC registered investment firm, hopes to raise about P120 million from the initial placement of about 120 million ordinary shares on the Botswana Stock Exchange (BSE) Venture Capital Board to fund investments in selected businesses in Africa. The firm, founded in 2014, has received approval from the BSE to place 240 million ordinary shares, 91.2 million of which have been offered through private placing to invited investors, and another 28.8 million are for sale through a public offer effective June 26 through July 17.
According to the company prospectus, the rationale for the offer is “to raise funds in order to establish a number of new subsidiaries of Afinitas that will have a pan African strategic focus, including companies focused on developing within their chosen sector or country; take advantage of a new interest in Africa as an investment destination from large institutional investors; to raise capital from investors in a cost effective manner; to create liquidity for shareholders.” Further, the company is listing with the BSE in order to facilitate future capital raises for expansion of investments and creation of subsidiaries operating in Africa from investors with an interest in Africa; to facilitate the acquisition of stakes in other companies through the issue of stock in the future; and to provide market exposure and indirect advertising which may facilitate future deals across Africa.
The prospectus states that capital raised will be used as seed investment for the setup of up to three Africa focused companies. These companies will initially be 100% subsidiaries of Afinitas. Where circumstances are appropriate, these subsidiary companies will be incorporated in Botswana and will be IFSC registered. The company points out that, however, a second round of financing is likely to be required for each new subsidiary to provide the necessary capital for a successful expansion into Africa. It is confident that the initial seed investment and the high quality Rupert McCammon led management team and strategy, should lead to enhanced value of the company thus potentially providing a capital gain for Afinitas shareholders, projected at 10% from the second year.
The company’s confidence derives from, it explains, the considerable demand from external investors (from a Botswana perspective) for high quality investment opportunities in Africa as a result of Africa’s projected strong economic growth forecast and the establishment of a large number of new investment funds with Africa mandates, resulting in a much larger quantum of investment funds available now in comparison to the funds available over the past 30 years.
On the board of directors seats McCammon, who is also the Managing Director. The former CEO of Stockbrokers Botswana has established a number of financial services companies in Botswana which serve in stockbroking, asset management and corporate finance sectors. He also has specific expertise in Africa’s resource sector. Another director is Lesang Magang, who is currently the managing director of Phakalane Estates. Leutlwetse Tumelo is another director, he has extensive experience in capital markets and the resources sector in Botswana. And finally, Dawn Pickering, an attorney who is a corporate finance advisor and was responsible for the majority of dual listings on the BSE.