A roaring Zimbabwe lion goes to London Patterson
A roaring Zimbabwe lion goes to London Patterson Chiweshe Karen Frisch Sergio Penchas Denis Rappaport 1
Zimbabwe Main Facts n Zimbabwe nation was created in 1980. n Single political party dominance since 1980 with relative political stability. n One of the most diversified African economies-25 % GDP from Manufacturing. n Economy has been previously closed to foreign investment. 2
Meikles Africa Limited n More than a 100 years of established operations. n 4 divisions: supermarkets, hotels, department stores and corporate. n Revenues of U$170 Million in 1996(3. 8 % of GDP). n Revenues CAGR (93 -96) of 7% in real terms 3
Private Placement n International private placement of US$ 75 Million (33% of company capital) n Why a private deal – Size of the transaction – Sovereign risk – Easier placement to sophisticated investors 4
Discount Factor - Risk Considered n Characteristics of the company n Domestic costs and revenues structure n Low domestic competitive environment n Entry barriers – Strong alliances with South African companies – Proceeds of private placement to highly internally invest 5
Discussion’s Topics n Discount Rate – Risk considered – Time varying discount rates – Terminal discount rates n How to mitigate risks n Additional information required to invest 6
Valuation 7
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