Published: 01 August 2017

THE private equity units of Rand Merchant Bank (RMB) and Investec Asset Management are tying up a multi-million-pula deal to buy 10 Botswana companies that are mostly suppliers to the Choppies Group and other retailers.

The 10 companies, housed under the name Kamoso Distribution were two years ago sold by Choppies directors, Ramachandran Ottapathu and Farouk Ismail to a consortium led by Standard Chartered Private Equity (PE) in a deal worth P452 million.

Under the terms of the new deal, StanChart PE which bought a 12.8 percent stake in Choppies in 2013 in a deal estimated to be worth $60 million, together with Development Capital Partners (DCP) are selling 72 percent in Kamoso Distributors.

RMB, which is the investment-banking arm of South Africa's FirstRand, is pursuing the deal through its private equity unit called RMB Ventures Seven, while Investec Asset Management is going through its Mauritius-domiciled private equity subsidiary, Investec Africa Fund.

The target enterprises under Kamoso Distributors include Keriotic Investments, which distributes groceries to Choppies, ILO Industries Grain (grain packaging), Honey Guide (milling company), Mediland Healthcare (pharmaceuticals distribution), Mont Catering (air conditioning supplies), Real Plastics (bottled water), Builders Mart (building supplies) and Liquorama (liquor outlets).

According to the Competition Authority, the directors of Kamoso are V. Sanooj (Indian); B. Stewart; G. McLaughlin (both Americans), and Rizwan Desai (Motswana). Peter Baird, the former head of the Standard Chartered PE Africa is one of the directors of IRK, a company controlled by Investec Africa Private Equity Fund and RMB Ventures Seven. Kamoso Distribution managing director, Derrick Soanes said he was unable to comment on the deal until all regulatory obligations have been satisfied.

Choppies directors, Ramachandran Ottapathu and Farouk Ismail pocketed P452 million when they sold the companies to StanChart PE and DCP two years ago.

At that time, Ottapathu said that the sell down was in line with good corporate governance and international best practice.

"In line with international best practice, we took an undertaking to dispose of our shareholding in these companies since they are related to Choppies, a listed entity," he said.

Efforts to get a comment from StanChart PE on why they were selling, were fruitless by the time of going to press. However, the Wall Street Journal reported in September 2016 that the London-based Standard Chartered PLC was looking to close its private equity unit over the next two years.

StanChart PE, which is a wholly-owned subsidiary of London-listed Standard Chartered bank, manages about $5 billion, including the bank's own funds and money from external investors such as the Goldman Sachs Group. The unit owns stakes in about 80 companies across Asia, Africa and the Middle East. In Africa, StanChart PE Fund has about $800 million invested.

- Mmegi