LONRHO plc is pushing for a comeback into Zimbabwe with plans to raise £70 million through a private placement for its subsidiary, Lonzim plc.
The group which disinvested from Zimbabwe in the late 90s, wants to use the capital to fund acquisitions and commercial property developments in the country.
It is reportedly looking to situate itself for the post-Mugabe era.
Lonrho last week appointed Renaissance Capital to work as placement agent for Lonzim, an investment vehicle for its proposed acquisitions and property development business in Zimbabwe.
“I am delighted that Renaissance Capital has agreed to act for the placement of Lonzim. Their knowledge of Africa and its unique opportunities, combined with their worldwide presence are an ideal combination to ensure that LonZim attracts the widest base of global investors possible,” said Lonrho chairman and chief executive, David Lenigas, in a statement last week.
Lonrho announced its comeback into Zimbabwe two months ago with the acquisition of an 80% stake in offshore company Blueberry International Services for US$5,45 million in cash.
Blueberry controls 60% of Zimbabwe Stock Exchange-listed telecommunications operator Celsys, and 100% of industrial chemicals manufacturer and distributor Gardoserve (trading as Millpal).
Lenigas, Lonrho director Emma Priestley and chief operating officer Geoffrey White this week joined the Celsys and Millpal boards.
Celsys owns a brand in the payphone market and operates the country’s sole authorised Nokia repair centre. It is the largest independent printer of security documents for financial institutions.
Market sources say the company has since opened talks with listed companies in Zimbabwe for possible takeover deals.
Lonrho development director, Mark Havercroft, was in Zimbabwe five weeks ago to explore investment opportunities. During his visit Havercroft is understood to have met with the managing director of Rainbow Tourism Group (RTG), Chipo Mtasa.
He also held talks with the shareholders of a local privately-owned hotel in the Eastern Highlands as well as directors of a foreign-owned mining group.
The nature of his meeting with RTG is not yet clear but sources said Havercroft was looking for a partnership in the development of hotels and properties in the country.
Havercroft told businessdigest that he will be coming back to Zimbabwe soon. He is expected in the country early next week to look for more investment opportunities.
Lonrho plans to use 80% of the proceeds from the private placement for Lonzim to fund commercial property development.
“It is intended that Lonrho will invest 80% in commercial property opportunities but will also look to identify Zimbabwean assets and companies with potential to grow rapidly with the benefit on investment and international management services,” said Lenigas.
The market is however worried that Lonrho might be trapping itself by coming into Zimbabwe especially after parliament recently passed the Empowerment and Indeginisation Bill which forces foreign companies to sell 51% to locals.
The company however says it is “cautious and well informed” in its investment plans in Zimbabwe.
Said Lenigas: “While there are clear risks associated with investing in Zimbabwe, I believe that the opportunities for economic growth in the country are enormous, and the intended establishment of Lonzim offers Lonrho shareholders the opportunity to participate in this.
“I believe that cautious and well-informed investment in Zimbabwe and the coastal access corridor will ultimately offer excellent returns for Lonzim shareholders, as well as Zimbabwean businesses and the Zimbabwean economy.”