Companies: LONR   

Africa-focused conglomerate Lonrho has spent £2.72 million buying into two Zimbabwean companies ahead of this month’s LonZim float.

AIM-quoted Lonrho (whose name incorporates part of Zimbabwe’s former moniker Rhodesia) has bought 80 per cent of Blueberry International Services, a British Virgin Islands company owning 60 per cent of Celsys, a Harare-quoted telecoms concern. Celsys sells and repairs mobile phones, runs Nokia’s only repair centre in Zimbabwe, prints chequebooks and other security documents, operates cash machines and provides software security to banks.

Lonrho has also taken control of chemicals manufacturer Gardoserve, whose operating arm, Millpal, supplies chemicals to the textiles and raw materials industries. Lonrho boss David Lenigas, who is joining the boards of Celsys and Millpal, argues that ‘now is the time to be establishing and supporting businesses that can develop’ in Zimbabwe, despite its present self-inflicted economic plight, rampant hyperinflation and the political isolation of Robert Mugabe’s regime.

In July, Lonrho revealed its plan to float LonZim, a fund to invest in Zimbabwe and neighbouring countries, for a hoped-for £70 million. It is a bold plan, though assets are cheap.

The long-term potential may be there, notably in agriculture, natural resources and tourism. But most observers don't see much scope for improvement until, first, Mugabe finally goes and, secondly, post-Mugabe power struggles are resolved.

At any rate, Lonrho’s moves elsewhere in Africa are winning support. Highlighted by Growth Company Investor early last year at 21.75p, the shares, which were 11.25p in mid-2005, have now hit 45p, valuing the company at £125 million, and could go further despite the risk.

Save 50 per cent off your first year’s subscription to Growth Company Investor magazine, and gain immediate access to all the recommendations online. Click here.

Lonrho	AIM	£19.34m	4.25p	0.25p
Click here for interactive charting
Other company articles:
Gem find cheers Lonrho			30/04/2008
Lenigas immersed in acoustics			21/02/2008
Lonrho backs Zimbabwe			02/10/2007
Lonrho moots £70m Zimbabwe float			24/07/2007