Public Accounts Committee (PAC) of Parliament has started probing the Public Service Pension Trust Fund acquisition of Amaryllis Hotel for K128.7 billion amid some documentation showing that earlier valuations placed the property far lower.
At the start of the public inquiry in Lilongwe yesterday, the committee heard that FDH Bank plc valued the hotel at about K30 billion in 2023 while Continental Assets Management Limited, a subsidiary of CDH Investment Bank, later pegged it at K36.7 billion in 2024.
The inquiry follows concerns that the acquisition proceeded despite reservations from the registrar of financial institutions.
Testifying before the committee, FDH Bank plc managing director Noel Mkulichi said the bank was engaged by Nico Asset Managers in 2023 to conduct a valuation of the hotel.
Pension Fund. | George Singini
He said the bank arrived at an average value of K30 billion after estimating the property at between K25 billion and K35 billion.
“Our report indicated the K30 billion value. After submitting the report, our role ended and we had no further communication from Nico Asset Managers or the pension fund,” Mkulichi told the committee.
He said FDH had no knowledge of a separate valuation placing the hotel at K47 billion in the same year.
Mkulichi also confirmed that FDH Bank acts as custodian of the pension fund’s assets but said the bank was not involved in subsequent valuations.
Taking her turn, Continental Assets Management chief executive officer Gillian Kachikondo told the committee that her firm valued the hotel at K36.7 billion in 2024 after being engaged by the pension fund.
However, she said the fund had already indicated a proposed purchase price of K48.7 billion and asked the firm to analyse its viability.
Kachikondo said the analysis showed that at K48.7 billion the investment would take 36 years to recover, with the business projected to remain viable for about 40 years.
She could not immediately determine the recovery period for the K128.7 billion purchase price when asked by PAC chairperson Steve Baba Malondera, saying further calculations would be required.
But Malondera questioned how the price rose to K128.7 billion within a year.
Communication The Nation earlier saw showed that the hotel’s price escalated from an initial market value of K47 billion by property management firm Knight Frank as at July 13 2023 to K128 billion.
In an earlier interview, property valuation expert Yeremiah Chihana of YMW Property Investment Co, famed for valuating the estate of former president Bingu wa Mutharika at K61 billion in 2012, said the cost escalations for Amaryllis Hotel were inevitable, citing time lag between evaluation and final sale agreement during which devaluation, foreign currency shortages and general price accelerations changed market conditions.
