Bomaid to cut MRI Botswana shareholding
One of the country’s largest medical aid providers, Botswana Medical Aid Society (Bomaid) plans to lower its shareholding in top medical services company, MRI Botswana, from 94% to 49% in order to iron out market-related issues with competitors.
MRI Botswana operates clinics, pharmacies and emergency response services throughout the country accessible by Bomaid and other medical aid societies.
Bomaid CEO, Moraki Mokgosana told BusinessWeek that while MRI has been providing services to three of the country’s four medical aids, market-related issues had led to a decision to divest.
“Our competitors thought that by engaging MRI, they are supporting Bomaid by giving business to their company (and) it made life difficult for MRI to be able to do business and be able to offer services to other medical aids,” he said in an interview.
MRI Botswana had a difficult 2020, with an operating loss of P1.3 million down from an operating surplus of P780,000 in 2019, as COVID-19 movement restrictions reduced foot traffic at its clinics and pharmacies. Bomaid directors,
who described MRI’s performance in 2020 as ‘tumultuous’ said they believed by allowing the business to be less encumbered to the ultimate holding company, MRI would be poised to broaden its customer base and grow to give more profitable returns to Bomaid.
The MRI divestment has been a board priority
for some time and BusinessWeek is informed that Bomaid recently entered into an exclusivity period until the end of July with a private equity firm interested in taking up the 45% on offer. The private equity firm is currently conducting a due diligence exercise on the MRI transaction.
Mokgosana confirmed that talks are ongoing with a potential investor, but said discussions were still at an early stage.
“We have not really set a target but we would want to be a minority shareholder, and ideally we would be happy if some of the medical aids took a stake,” he said.
“We had an offer from somebody we are engaging with and the discussions have not progressed much. “They wanted us to take 51% of the stake while they remain with 49%.”
Bomaid had wanted to divest earlier from MRI but the progress has been slow, which the CEO explained was because MRI by then was experiencing some challenges in stabilising their operations and Bomaid did not want to sell a shaky business. The medical aid company also needed to get the board to agree with the decision and also wanted to find a suitable partner who shares their vision.
“We wanted to find a suitable partner. “Sometimes you find somebody whom you do not share a vision with and this ends up disrupting the operations of the business,” the CEO said. Last year, MRI added to its shine as an investment target by acquiring more emergency response vehicles and also continuing to focus on streamlining processes in order to deliver a more “consistent and superior customer experience”.