BIHL look into mining for private equity investment

The Botswana Insurance Holdings Limited (BIHL) Group Chief Executive Officer (CEO), Gaffar Hassam has said that they are looking for long-term investments and mining is no exception.
He revealed this last week at a press briefing prior to presenting the Group’s financial results for the year ended December 2013, making a profit of P500 million.

“Mining is a focus area from a private equity point of view, financially we remain stable, we have a lot of cash we need to invest in but we also appreciate the risks involved in the sector so we have to be careful where we place our funds.  We will not go into mining ourselves as we do not have expertise in the field, however, we do have funds we want to deploy and look for opportunities out there to invest in,” said Hassam.

He further said; “We are looking at investing locally and outside the country as it is one of the focus areas. Financially, we remain very stable and that means we have a lot of cash we need to deploy our capital. In terms of value of our assets, we do not have an allocation to say P20million; we are going to fund potential people who are going to invest in that area. It will depend on the opportunities that will be put before us to see how much we inject as we look at the project case by case,” he said.

BIHL’s idea to invest in mining, comes at a time when some business people are suggesting that government should take heed to partner with the private sector in infrastructure development through Public-private partnership. Botswana currently has an abundance of coal but the rail infrastructure development to export the resource to the potential markets is lagging behind.
Local businessman and former CEO of Public Enterprises Evaluation and Privatisation Agency, Joshua Galeforolwe told Gazette Business in an interview recently that the billions that pension funds have, and access liquidity in banking systems can be used to implement some of the infrastructure projects in the mining sector. “This could create instrument for pension money to start flowing into these investment vehicles that would finance these projects and likewise mop up the accessibility to the banking system, once we have a stream of projects it will up the skills and specialised projects. Infrastructure is a key to deliver upliftment of the economy,” he said.

Meanwhile, BIHL’s life insurance business saw an improvement in both local and global economy, making the results to be consistent with the recovery, leading to 26 per cent increase. However, the annuity line underperformed, compared to prior year due to fewer than expected retirees. This is expected in low interest environment as annuity benefits tend to be generally depressed in such a period. Due to underperformance of the annuity line, the net premium income decreased by three per cent from P1.95 billion to P1.88 billion.

Asked by Gazette Business why there was yet another underperformance, Hassam said; “It’s not underperformance per se, but it’s individuals who have reached their retirement age, because of low interest rate, one has an option to defer their annuities or take them immediately. It also depends on the demographics and interest rate environment which determines whether one defers or not.”
Bifm’s assets management business also saw a 25 per cent growth, reaching P27.1 billion.