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Marketplace News|
Tuesday, August 19, 2008 - Web posted at 8:41:47 AM GMT DBN to angle for N$1,3b pension fund investment DA'OUD VRIESTHE Development Bank of Namibia (DBN) is positioning itself to get the lion's share of local pension fund investments in unlisted business entities, as required in the 2007 amendment to the Pension Funds Act. |
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In the 2007 DBN annual report released yesterday, chairman Sven Thieme says that the bank will introduce a private equity facility for partners with a specific development outlook to participate in this investment vehicle. Modalities of the equity share facility are being hammered out and would be ready for introduction next year. The amendment to Regulation 28 of the Pension Funds Act requires pension fund administrators to invest 2 per cent of pension funds assets in unlisted companies in 2008, growing to 3,5 per cent in 2009 and 5 per cent in 2010. An estimated N$1,3 billion would be available for local investment in the first year of the implementation of the new Regulation 28 requirement. DBN's Chief Financial Officer, Renier van Rooyen, says pension funds could either take up a share in the private equity facility or could co-finance projects in which DBN are involved. According to Thieme, the change to Regulation 28 would encourage new capital flows in the market, "which will have to be directed into private sector and infrastructural initiatives". "It is against this background that the DBN, in partnership with relevant institutions, will introduce a private equity facility that will structure and direct these anticipated resources into businesses' growth, from 2008 onwards." The report comes more than seven months after the close of the company's books on December 31 2007. In the period under review DBN had approved 21 loans to the tune of N$285,75 million ranging from small and medium enterprises (SMEs) to the industrial sector. Twenty five per cent of the projects approved have "significant BEE [Black Economic Empowerment] ownership". DBN has also introduced a preference share facility, where the bank took up shares in borrowing companies, which the latter could buy back at a later stage. This arrangement, apart from it being "redeemable", allows the bank to "monitor and assist" in the sound running of these entities. It has entered into three such deals amounting to a total investment of N$26 million. In Ongwediva MediPark, it took up preference shares amounting to N6,5 million, in Evi Gold 15,2 million and 4,9 million in Oshikango Plastic. "The introduction of preference share facility makes it possible for us to add value to projects that otherwise would have found themselves burdened by the obligations of loan arrangements," says David Nuyoma, DBN Chief Executive Officer. The bank in the 2007 fiscal year did not make any provision for bad debts despite its loan book increasing by 100 per cent in this period. This and other achievements, according to board member Estelle Tjipuka and chairperson of DBN Audit, Risk and Compliance Committee, "effectively prove that sustainable development is not just a theoretical concept". Underscoring this, Van Rooyen says the banks exposure is "not really a problem" at this stage and this is why no provision had been made for impairments. DBN finances projects in 11 of the country's 13 regions. Karas and Kunene are the only regions in which the bank is not operational in terms of project financing. |
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