The new fund, like the Zimbabwean (Sawara) has a penchant for creating value in hopeless situations.
So when it emerged this week that TA Holdings chief, Shingi Mutasa, and the CEO of one of London’s most respected fund managers, Neil Woodford, had invested in Masawara plc, the news created a lot of hype, even in London.
According to the company’s website, Masawara hopes to take advantage of “distorted” valuations on the market.
“Following the stabilisation of the economy, Zimbabwe presents an attractive investment opportunity. Masawara is well placed to take advantage of depressed valuations in Zimbabwe as companies look for investment to fund growth. While primarily investing in Zimbabwe, the company will also consider investments in neighbouring countries. In addition, while control is not a pre-requisite for investment, the company requires board influence in all of its investments,” the company said.
Woodford, who manages about US$26 billion for Invesco Perpetual, has bought a 29,5% stake in Masawara, a fund that will be valued at US$80 million when trading in the shares begins on London’s Alternative Investment Market in a fortnight. This week reports said one of the most highly regarded fund managers in London had committed US$25 million of clients’ money to investment in Zimbabwe.
Masawara, like LonZim, intends to buy into Zimbabwean mines, agriculture, telecommunications and property companies as well as taking part in the privatisation of state-held assets. The company, which is incorporated in Jersey, a tax haven, owns 40% cent of Harare’s biggest commercial property development, Joina Centre, and almost a third of TA Holdings, another investment company with stakes in agriculture and mining. Its strategy, to target cheap assets, is not new either.
Until 2007, the new LonRho, like most risk averse investors, had stayed out of Zimbabwe for almost a decade since the death of its patriarch, “Tiny” Rowland.
Its first acquisition was ZSE midcap technology group Celsys in 2007. Since then, the company has been targeting cheap assets in the country.
Even after dollarisation, current executive chairman David Lenigas’ strategy remains simply going after cheap but valuable assets.
Though LonZim’s parent company, LonRho, tries to be the company it used to be, analysts say LonRho could have blown its chances to reclaim its former glory.
The old LonRho owned just about everything in the economy during its heyday. The group controlled Hwange (then Wankie) Colliery Company, David Whitehead, Philip Chiyangwa’s Crittal Hope, Zimoco, the local Mercedes Benz dealer, and gold mines, among other interests. The group was so diversified that Forbes valuers could not put an actual value to it.
The conglomerate was one of the world’s biggest distributors of automobiles. In Britain, Europe and Africa, Lonrho sold Rolls-Royces, Volkswagens, Audis, Mercedes, and French, Japanese and American cars. The company was the third-biggest producer of platinum (it owned 100% of Western Platinum mines in South Africa) was a major producer of gold in Ghana and in Zimbabwe and published one of Britain’s major Sunday newspapers, The Observer, and 23 provincial newspapers in the UK.
Lonrho was also the largest single producer of food in Africa, owning 1,5 million acres and 125,000 cattle in 10 countries.
Adding up the bits and pieces, Forbes said the group consisted of 800 operating entities doing business in 84 countries on four continents — although Africa was by far the most important contributor to Lonrho’s earnings.
That was the old Lonrho under “Tiny” Rowland.
Could LonZim be a worthy successor?
The timing of its decision to raise £100 million for Zimbabwe in 2007 was deemed not perfect. Today, uncertainty surrounding empowerment laws and regulations are an impediment.
Last week, the company announced it had agreed on a partnership with Econet which would see its subsidiary ForgetMeNot Africa supply solutions for instant two-way chat. It appears an interesting service, but surprisingly it would come from a company that had promised large scale takeovers at inception. That Econet itself has kept cool on the announcement suggests Econet does not see it as a big deal, or perhaps, that LonZim, in its haste to appear to be stitching up the deals it promised, went public a bit prematurely.
Had LonZim used the money it had at launch quickly, it would probably have scooped up more valuable businesses. The market was cheap and LonZim appeared to have loads of cash.
The offer is still valid. With over US$150 million, LonZim could still buy a sizeable portfolio.
The company could pick up Afre (US13 million), BAT (US$40 million), FBC (US$11,2 million), Star Africa (US$36 million), TN Holdings (US$8,4 million), Trust Holdings (US$3,5 million), ZPI (US$8,5 milliion), and M&R (US$36 million).
Now more and more fund managers are following in the footsteps of LonZim and doing a better a job of it, too.