Seychelles Pension Fund acquires 20 percent stake in Cable and Wireless; opposition LDS raises red flags

The Pension Fund invested $24 million to buy the 20 percent share ownership in Cable and Wireless. (Salifa Karapetyan, Seychelles News Agency) 

(Seychelles News Agency) - The Seychelles Pension Fund (SPF) has acquired a 20 percent equity share in the Cable and Wireless of Seychelles with the aim of diversifying its investment portfolio, said the chairperson of the Board on Thursday.

The Pension Fund invested $24 million to buy the 20 percent share ownership in Cable and Wireless, which has ensured it a seat on the board of the company.

"The board feels it is a good investment and an opportunity. To date, the Pension Fund has invested in the Seychelles Commercial Bank, SACOS (State Assurance Corporation), Seychelles Breweries Limited and it has always been our wish invest in telecommunications," said Jacquelin Dugasse, the chairperson of the fund's board.

Seychelles' opposition political party warned that the Fund may have paid too high of a price for the purchase and called for "immediate action" to protect the Fund's beneficiaries.

Cable and Wireless Seychelles was purchased by a consortium of local entrepreneurs earlier this month at $130 million from Liberty Global, one of the world's largest television and broadband companies. The purchase makes CWS the country's first completely Seychellois-owned telecommunication company.

The new owners include the JFA Group comprising Jamshed Pardiwalla, Ravji, Rahhwani and Andy Bainbridge, as well as Victoria-based professional services firm ACM, which represented the shareholders in the deal.

Dugasse told reporters that "the company is promising despite competition and dynamic market, and it is an investment that we will continue to monitor closely."

The chief executive of the fund, Lekha Nair said that diversifying the portfolio ensures that pension can be paid to the over 43,000 contributing members for life after retirement.

The representative of CWS, Gregory Albert, explained why the company approached the pension fund to buy shares in the telecommunications company.

"We expressed that there were 43 percent of unallocated shares, and we expressed that we were looking in mechanism to share it with Seychellois. In this context, we saw that PensioFund comes perfectly aligned with this decision, because this is one way to reach a maximum number of Seychellois – over 43,000 people - in a fast manner and at all level," said Albert.

He added that the company is now "working on how to continue to reach out to every level of Seychellois when it comes to the remaining amount of shares."

The deal between the pension fund and CWS was finalised after the two parties agreed on a set of conditions set by the fund.

Firstly, Seychelles Pension Fund asked that conditions given to shareholders should be equal for all. Secondly, the fund requested that the $24 million contribution made is used to pay off part of the $84 million debt owed by the consortium. CWS is a highly leveraged company with 60 percent debt and 40 percent equity, increasing the risk element.

Thirdly, should SPF request to exit the company, its will be able to sell it shares at the highest value.

The fund explained that the decision to purchase shares in Cable & Wireless of Seychelles follows detailed investment appraisal including due diligence, financial assessments and approvals through its finance and investment committee and Seychelles Pension Fund's board of trustees.

Seychelles' opposition coalition party, Linyon Demokratik Seselwa (LDS), has raised concerns over the transaction and called for a full inquiry.

In a press release on Thursday, LDS said that it "is alarmed at the possible ramifications of the transaction by the Seychelles Pension Fund (SPF) over the purchase of shares in Cable and Wireless Seychelles and calls for immediate action on several fronts to avert what may be an attempt to exploit the resources of the Fund for the benefit of some individuals."

In the press conference, Dugasse said that the fund paid a higher price for the shares than what the initial investors paid for.

"LDS finds this feature of the transaction totally unacceptable. Not only did the SPF miss the opportunity to make the investment  in a timely manner at a better price if it wished to do so, but it may have been served as simply a vehicle to enrich other persons," stated the press release.