Coen Welsh | Nov 14, 2017 | 0
African Bank attracts GIPF investment interest
Like a phoenix raising from the ashes, the resurgent African Bank has attracted interest from the Government Institutions Pension Fund (GIPF), this, despite the pension fund suffering a loss of over N$170 million on the investment it has made in the failed bank.
This is the impression the Economist got in the last week of April in conversation with the GIPF. Said the government pension fund, “GIPF has kept up to date with the developments regarding the “Good Bank” and the initiatives to revive it. Over the last few years we have awaited the conclusion of the discussions surrounding the changes to the bank, with hopes to recoup any losses made as a result of this unfortunate event.”
The GIPF added, “we are therefore pleased to hear that we might stand to participate in the newly capitalised bank and therefore we remain interested to see what valuations will be ascribed to the “Good Bank”. We therefore trust that the asset managers will apply their respective investment processes to ensure that we do get value for our investment in the “Good Bank”.”
The African Bank made a return early this month when its curator, Tim Winterboer, over a 20-month period put the pieces of the African Bank puzzle back together. Newly appointed Chief Executive Officer, Brian Riley will have his work cut out for him, with the Bank set to honour its debt obligations with a final offer to bond holders to take up new debt and some cash, allowing it to repay its creditors 90% of their investments.
On this development, the GIPF said, “GIPF as an investor is exposed to numerous indices on the stock market and through our non-discretionary mandates we have exposure to different stocks. With regards to ABIL, GIPF had exposure of N$172 million of which 89% of the amount was through senior and subordinated debt, 9% was through equity and the remaining 2% was through preference shares.”
“The collapse of the bank not only hurt the equity holders through the dilution of value, but even senior debt holders had to take a “10% haircut” with regards to their exposures. Therefore all participants that held either stocks or debt did feel the impact of the collapse of the bank,” the GIPF commented on its past with the unsecured lender.
GIPF members will however be encouraged to learn that the restructured African Bank is hoping to return to profit by 2017, while future earnings will be bolstered by new ventures into retail banking and insurance.