- Diamond market has taken a hit that has affected valuation of HB Antwerp
- Market decline has strengthened Botswana’s bargaining position
- Botswana to press for more shares at no extra cost on $65m deal
- President Masisi announced the $65m for 24% equity deal in March last year
BONGANI MALUNGA
Botswana aims to increase its offer for an equity stake in Belgian diamond cutting and polishing firm HB Antwerp following a sharp decline in the diamond market that has affected the firm’s valuation.
Both parties had initially agreed on a $65 million package that equates to a 24 percent stake.
However, a global decline in the diamond market has seen HB Antwerp’s valuation taking a hit, presenting Botswana with an opportunity to up the ante by maintaining the same monetary offer for an increased equity stake.
Declined by 6%
According to diamond industry analyst Paul Zimnisky, the global diamond industry has declined by 6 percent this year mainly owing to the presence of synthetic diamonds.
The lab grown diamonds are an alternative to the natural diamonds as they can be up to 85 percent cheaper, according to another report from American news network CNBC.
This has forced a reduction in prices for natural diamonds that has ultimately affected revenue generation for the world’s diamond industry players.
To seek 49.9%
Botswana’s intention was announced by the Minister of Minerals and Energy, Lefoko Moagi, when he recently told Parliament that the move will be at no extra cost on the $65 million deal.
Minister Moagi added that Botswana is now in a position to double the equity stake acquisition up to 49.9 percent. He stated that Botswana will return to the negotiating table with HB Antwerp in due course.
While the diamond market decline has affected HB Antwerp, it has also strengthened Botswana’s bargaining position as the country can revisit the agreement with a fresh perspective of industry related developments.
“We will not be injecting more capital but we will get more shares for the same amount proposed in 2023,” said Moagi. “Instead of the 24 percent, we will negotiate to get 49.9 percent for the same amount initially proposed.”
Deal yet to be signed
Botswana’s deal with HB was agreed in principle last year but both parties are yet to put pen to paper to seal the deal. In June, President Mokgweetsi Masisi stated that the signing of the deal was close.
Explaining the delay, Masisi told American diamond industry publication JCK News: “We are still doing due process and valuation. You know they had a little trouble internally. Happily, that is over. That required enhanced due diligence. We are a very frugal government.”