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Lonhro’s Zim investment arm to float shares on Aim

Posted by CM on December 16, 2007

In a vote of confidence for Zimbabwe, LonZim, a Lonrho subsidiary established to make investments in Zimbabwe, will list on the Alternative Investment Market (Aim) in London, and expected to start trading on December 11, 2007.

Market capitalisation would be £36,5-million, at the issue price of 100 p a share. The company raised £29,2-million though its book building process, and 7,3-million shares were acquired by Lonrho.

In June 2007, it was indicated that LonZim would seek to raise a minimum of £50-million before listing.

LonZim has said that it would not have a particular sectoral focus, but may make investments in the tourism, accommodation, infrastructure, transport, commercial and residential property, technology, communications, manufacturing, retail, services, leisure, agricultural and natural resources sectors.

“We are pleased to have concluded the book building process for LonZim and to have successfully raised the capital required to pursue the significant opportunities that exist in Zimbabwe. My fellow directors and I look forward to identifying opportunities, which we believe will provide long-term returns for our shareholders,” stated Lonrho chairperson David Lenigas.

It added that it would use the investment skills of the company directors and their advisers, and would “seek to identify individual companies in sectors best positioned to benefit should there be improvements in Zimbabwe’s economy.”

Although Zimbabwe boasts several tourist attractions, tourism in the country has been reported to have dwindled over the years.

Industry opportunities in Zimbabwe could include the mining of coal, gold, platinum, copper, nickel, tin, clay, ferrous and nonferrous metals, steel, as well as wood products, cement, chemicals, fertiliser, clothing and footwear, foodstuffs, and beverages.

Engineering News

Fine, several articles have recently been written on how some investors are willing to gamble that there will be some kind of political change soon in Zimbabwe, which will make having a foot hold there now worthwhile. The country’s basic infrastructure and many systems still have few parallels in Africa, even in the country’s current pitiful state.

But it seems a little strong to have begun the story with “In a vote of confidence for Zimbabwe!” It almost sounds like saying “we believe things are being done properly,” which they are not with 8,000%+ inflation, many areas of the capital going for days or longer without electricity and no local currency available even from the banks! Perhaps that first line was meant to convey a recognition of the potential the country still has to come around under the right conditions.

In any case, with Mugabe likely to remain at the helm for several more years, I think Lonzim has taken a pretty risky gamble. But then again the Lonrho chairman did make it clear that they are investing for the long term, and for now, Zimbabwe still remains a good long term prospect in areas like property.

It will be interesting to watch how things pan out for Lonzim over the years.

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