The Government Institutions Pension Fund (GIPF) has reassured its members and stakeholders that underlying companies and investments associated with fund manager, Baobab Capital, through its growth fund as a Special Purpose Vehicle (SPV), remain safe and sound.
GIPF, which is tasked with the management of around N$120 billion, had committed N$140 million to Baobab over a 10-year period to invest in and grow start-up companies in southern Africa.
Baobab Capital, was de-registered by the Namibia Financial Institutions Supervisory Authority (Namfisa) following the discovery of irregularities by auditors.
“The fund would like to reassure stakeholders and its members that the underlying companies and investments (portfolio companies/portfolio investments) in which the SPV has invested on behalf of the GIPF, remain safe and sound. GIPF would like to assure the portfolio companies under the SPV that it is working speedily to replace the directors of the SPV who have resigned,” said David Nuyoma, CEO and principal officer to GIPF.
In the statement, Nuyoma confirmed that GIPF committed N$140 million in October 2016 to the Baobab Growth Fund SPV administered by Baobab Capital. The SPV has a venture capital mandate to invest in start-up companies.
Nuyoma added that the N$140 million was committed over a 10-year period and as of July 2020 N$87 million had been invested in various portfolio companies, which Nuyoma assured are still on track in fulfilling their mandates.
Speaking to Inside Business, Baobab’s managing director, Jerome Kisting, said they received the notice of de-registration on 11 September after which they notified Namfisa on Tuesday, 15 September that they would appeal the decision. “The case will soon be before the Appeal Board because obviously we don’t agree with the decision. Once this process is concluded we will make a full statement to the media,” said Kisting.
According to GIPF, some irregularities were discovered last year through the SPV’s auditors. This resulted in the board of the Baobab Growth Fund, on recommendation of the GIPF, commissioning an independent investigation by Apex Fund Services to identify issues flagged by auditors.
“GIPF requested the directors of the SPV to take drastic remedial actions. Consequently, most of the issues found by the investigations were subsequently attended to and were being rectified by the fund manager and SPV until the directors of SPV resigned on 8 September 2020,” reads the GIPF statement.
Both Baobab Capital and the Baobab Growth Fund are regulated by Namfisa which means the authority conducted its own inspection into the affairs of the two companies. These findings and that of Apex Fund Services led to Namfisa re-registering Baobab Capital and the Baobab Growth Fund.
GIPF further noted that it is cognizant of the pivotal role it plays in the Namibian economy and the colossal impact it has on members and stakeholders.
“It is on this premise that the fund will continue to work closely with Namfisa to ensure that the portfolio investments held via the SPV remain safe. GIPF further remains committed to safeguard and grow the fund for the benefit of its members,” the GIPF statement concluded.