18 April 2008
IFSC attracts three new funds

The Botswana International Financial Services Centre (IFSC) expects three major funds to domicile and subsequently be operational in Botswana by the end of this calendar year.

The sizeable funds, two of which are property focused and a resource sector fund, have been given conditional approval to commence operations by the IFSC Certification Board.

Chief Executive Officer (CEO) of the IFSC Alan Boshwaen said in an interview with Business Week that buoyed by unprecedented interest in investing in Africa, all three funds expect to be fully subscribed in the next three years.

The funds, namely Investec Inc. Property Fund, Africa Real Estate Fund and Africa Botswana Mining Fund, will be administered in the country but be regional in nature; they will be promoted by large, regional or international institutions.

"Discussions have reached an advanced stage," said Boshwaen. "The funds have probational approval pending the satisfaction of remaining regulatory processes."
The first property fund, which is promoted by the London-listed Investec Group, is to set aside US$75 million (P484 million) to go into Botswana property assets. The company projects to grow in size and scale to approximately US$500 million (P3.2 billion) by the fifth year of its operation. The Botswana Insurance Fund Management (Bifm), with the collaboration of World Bank Group subsidiary, International Finance Corporation (IFC), is to establish the second regional property focused fund.
Boshwaen said the Africa Real Estate Fund is of similar size and orientation as the Investec fund.

However, the Africa Botswana Mining Fund is an indexed fund that only invests in the resource sector. The initial seed of the fund was from Bifm Capital and is projected to raise $120 million within three years.

It will raise funds by selling the fund to international investors interested in acquiring exposure to the booming Africa resources commodities sector.

"We clearly want to pursue this sector (international investment funds) because we feel our legislative and regulatory environment is gaining the confidence of those leading institutional investors." Boshwaen said on that basis, the IFSC would prove itself as a legitimate competitor to Mauritius.

Mauritius is currently the major intermediary of such investments into India and Africa with an estimated $40 billion (P258 million) worth of aggregate funds.

Botswana is the only other sub-Saharan African country to create such an environment through the IFSC. "We are starting from that relatively small base,"

Boshwaen continued, "but we have an opportunity to grow because at least we are somewhere ahead of the pack." He said the African Venture Capital Association (AVCA) conference his company recently co-hosted here was a success. It attracted over 300 delegates from African and non-African countries.

The IFSC successfully lured fund and equity managers and international investors who have over 5 billion Euros under their management to the AVCA conference.

"Our goal was partially met because we made engagements with leading fund managers. We will pursue those leads, but the message to put across is that Africa is now being found to be of investment potential and Botswana has an increasing role to play."

Botswana IFSC was established to be a world-class hub to facilitate the delivery of a wide range of cross-border financial services to clients in other countries.