Afinitas Limited, a company registered as a public company in May 2014, will float its shares on the Botswana Stock Exchange (BSE) under Venture Capital Market subject to the acceptable spread of shareholders and minimum subscription being raised.
BSE has approved 240 million shares to be listed on the local bourse and by Friday Afinitas issued 28.8 million shares at P1.00 per share in Initial Public Offering (IPO). This will run until the 17th of July and thereafter listing and trading of shares on the BSE will commence on the 27th July.
Afinitas Executive Director, Leutlwetse Tumelo, said on Thursday that they intend to raise P28.8 million during the IPO which they aim to achieve from a shareholder spread of 75 investors to add to P91.2 million that has already been raised through private placement.
The capital raised through the IPO and private placement will equal P120 million which Tumelo said they will use for company’s expansion strategy in Africa. The money will be used as a seed investment for a minimum of one and a maximum of three Africa focused companies.
The company has set 100 shares as the minimum an investor can purchase at P1.00 per share. Tumelo explained that investors will get exposed to further markets of the subsidiaries once the company grows.
According to Afinitas listing prospectus, the company seeks to establish business in the financial services, including, but not exclusively insurance companies, leasing companies, fund management companies and lending institutions.
All the companies to be seeded by Afinitas will initially be a 100 percent of Afinitas. Tumelo explained that a number of exist strategies are available for Afinitas, including listing each subsidiary on a recognised market such as BSE or London Stock Exchange.
In terms of the investment strategy, Tumelo said they have no intentions to set up subsidiaries in sectors such as mining and exploration, including oil and gas, weapons and tobacco industry as well as companies that have high level of government reliance except for regulatory purposes.
They will instead focus on companies that are cash generation, do not require frequent cash injection and have the ability to benefit from economies of scale within the chosen country or sector.
He said the company seeks to take advantage of the unprecedented high levels of interest in Africa by major institutional investors. With a likelihood of the need for further capital injection by subsidiaries, Tumelo said due to limited capacity of the local market, funds are likely to be raised from external investors.
Patriot Business asked a research analyst at Imara Capital Securities, Ngodya Chimbwete if the P120 million to be raised by Afinitas will be enough to finance their investments. Chimbwete said it would be difficult to say whether the money is enough or not since the company is not being specific about the exact kind of investments it is seeking to invest in.
He said at the moment opportunities of scale are not clear. Asked if it is viable for a start-up company to list and trade its shares on the stock exchange, Chimbwete said listing is one of the ways in which companies raise capital through.
Chimbwete said buying shares in such companies is for investors with high risk appetite and also the Venture Companies Market is a risky market itself. He said this kind of investments is for those looking for long returns as opposed to those seeking short-term returns.
Meanwhile, Afinitas board of directors is made up of four individuals with Lesang Magang as chairman, Rupert McCammon as Managing Director, Leutlwetse Tumelo as Executive Director and Dawn Pickering as Director.