Botswana Public Officers Pension Fund (BPOPF) CEO Boitumelo Molefe says the fund is looking into alternative form of investments besides listed equities. Addressing the media on Wednesday, she declared though that they will not be totally abandoning listed equities and bonds. “It is always good in our portfolios to have uncorrelated assets. We cannot say we are leaving the listed space so this is why we need a good mix as a pension fund,” Molefe said. She said the advantage of this is that when there is a period of low growth on the listed space there can be growth on the listed space. “In terms of our current allocation on the offshore space we currently have two hedge fund managers, one private equity fund of funds managers which means this manager has fund of funds meaning lot of equity managers under one fund,” said Molefe. In addition, she said they have one Africa structured finance fund with a company which invests in Africa. Molefe said the pension fund has investments both in offshore and the rest of Africa in countries like Nigeria, Kenya but very little in Botswana, adding that they are now turning their focus to the local market. “Currently we have a lot of potential unlocked locally. We have got one private equity manager at the moment and one property manager and that is not enough and if you look at our allocations we are overweight equities because we are underweight alternatives,” she said. Besides the potential that alternatives have, Molefe said it also has advantages as it develops the local economy. She said if infrastructure can be developed and funding to the SMMEs improved then the economy will do well. “If you look at a lot of economies they have grown by developing the SMMEs industry as it creates employment and generates opportunities and creates a lot of economic activity as well.”
To achieve these, BPOPF has launched an incubation programme where it aims to appoint initially to private equity managers which will be an outlay of P1 billion, meaning P500 million for each manager. Molefe said the rationale is that the asset management base locally is dominated by foreign players and they are large and dominant in the local economy. She said start-up asset managers face stiff competition from these foreign asset managers. The pension fund will provide seedling capital to these start-ups to assist them to build enviable track records which will then allow them to grow into large managers that will attract other pension funds which will lead to growth of the industry locally. “The purpose of this is to develop local talent. If you look at asset management it is about investment in people,” she said, explaining that they wanted to invest in local talent to improve diversification and have a meaningful impact on the development of Botswana. Molefe said a lot of countries across the world have developed their economies through capital from the pension funds and said the same can be done here. “If you look at the advantages of the incubation programme it stimulates the economy, it creates employment opportunities and develops local talent.” All these, Molefe said, do not come without risks as concerns are raised whether or not these start-up companies would lose members’ funds. “The risk of course is that managers have a limited track record and that is a risk because we do not know the capability of these start-ups,” she said. The other risk, she said, is staff retention as at the beginning it is an uphill journey which may leave others frustrated and decide to leave.