Wesbank

Afinitas upbeat about the future

SHARE   |   Monday, 03 April 2017   |   By Kabelo Adamson
Afinitas upbeat about the future

Afinitas, a company which is focused on establishing and developing new business across Africa, has already acquired a number of businesses since listing in 2015. The company’s Executive Director, Leutlwetse Tumelo has said: “What we have done in 2016 was to focus on building that asset base for Afinitas,” he said, stating that at the end of 2015 they only had Africa Events Limited (AEL) in the portfolio in which Afinitas owns 50 percent stake in it. AEL is a specialist events management business whose primary focus is to organise investor oriented events. “It is really more about investment promotion across Africa and that is what the company specialises in,” he said. Tumelo said in 2015 they had a shorter financial year as they had just started and completed listing on the Botswana Stock Exchange (BSE) in July that year. Last year the company upped its pace and started rolling out across Africa. “The first entity that we went with was Ethiopia Investment Limited (EIL),” he said. Tumelo said Ethiopia, as the most second popular country in Africa with under a 100 million people, has a significant domestic market for anything that is consumer oriented. He said Ethiopia is one of the biggest economies on the continent and by developing EIL they are creating a vehicle that is in a position to participate in the Ethiopian economy and drive investments into the country. “We believe Ethiopia is an attractive destination for long term capital and we believe is the ideal place to be investing into.”


According to a Deloitte report on the country, Ethiopia has been among Africa’s most impressive growth perfomers over the past decade, averaging 10.9 percent annual growth between 2004 and 2014, despite being a non-oil country. Tumelo has nothing but praise for Ethiopia and says another key thing is that the government there has built a track record to show investors that it is really committed to foreign investments and are committed to developing the country. For that reasons, he said, Ethiopia for Afinitas is as excellent unique opportunity for long term capital. “We have set up EIL specifically as a permanent capital vehicle. We will be looking into funding investment opportunities in Ethiopia and that will long-term capital,” he said. The expectation is that EIL will in 2017 focus more on making some investments, Tumelo said. Another company under Afinitas is Adventis Limited, a Pan-African asset manager that looks for investment opportunities across the continent. “It is currently in the process of establishing its first fund and subject to regulatory approval, that fund could be in place by the end of 2017,” Tumelo said. Adventis and Ethiopian Investments Limited have been each allocated a budget of $2.5 million to set up the businesses. At this point, Tumelo said, they are happy with the progress of these two companies. Africa Events Limited’s flagship event is the Africa Financial Sector Investment Conference that is held annually in London with the next one coming at beginning of May this year. “This is a unique conference in that it is really a specialised conference that attracts the entire top world Africa focused financial services companies and is also attended by Africa’s top financial services companies.”

The conference has been running for the last five years and as Tumelo says, the great thing about it is that attendants keep on attending it year on year. It is anticipated that attendance will increase even this year. Tumelo anticipates that AEL will grow into a huge events company and in the process become an essential part of Afinitas. He said they will be looking into expanding the portfolio of AEL having been given the mandate by the board to do so. “This year we are planning to do an investor roadshow across 12 African countries which will be done across all regions,” he said, affirming that the first one will be held in Southern Africa before being rolled out to other regions such as East and West Africa. He said the intention is to expand events across the continent is to generate more revenue for Afinitas. Tumelo appreciated the good work of his team – with expertise and experience in Afinitas’ core business – in advancing the business. “Last year it was all about setting up the businesses. 2017 and going forward it’s about making those businesses profitable and that is where the management focus would be this year so that our shareholders can start seeing returns coming through.” Afinitas announced its results for the year ended 31 December 2016, which shows that the company has encountered $324, 643 loss. The company says as it is with any start-up operating costs are always likely to exceed revenue generated due to investment in areas such as human resources and infrastructure at a time when revenue streams are not fully developed. In this context, Afinitas management says administrative costs which include investment in travel expenditure and employee remuneration increased notably during the year. Despite the loss, the company believes it is in a strong financial position as total cash on the balance sheet amounts to $8 million which includes $5 million allocated to EIL and Adventis.