The Financial Gazette

Dumisani Ndlela, Staff Reporter

Zimbabwe has its own towering black business mogul, except he is not a product of the BEE, a black economic empowerment revolution which has created a breed of flashy black moguls in South Africa — Patrice Motsepe, Cyril Ramaphosa, Tokyo Sexwale and Saki Macozoma, among a few tens of others — and has recently found space in Zimbabwe’s contentious political terrain. Yet Shingai Mutasa still wants to be counted among beneficiaries of a post-independent Zimbabwe, which lacked a deliberate empowerment policy for years, and is not spiteful of fellow blacks trying to get their way into corporate ownership through the BEE door.
“There was urgency in South Africa to create black capitalists,” said Mutasa in an exclusive interview with The Financial Gazette.
“Over time, you will have that evolution taking place here.”
In Zimbabwe, empowerment has occurred through trial and error, and a few notable black business acquisitions did indeed take place over the past 30 years, noted Mutasa.
But, he maintains, the political imperative had been more important than the business imperative, “and this is where the hard knocks would have come through”.
The need to develop and grow local black entrepreneurs, he said, was no different from say German or China demanding that certain investments in their countries would require local partnerships.
“It makes good sense to partner locals,” he said.
But, he hastens to point out, the indigenisation and empowerment legislation is not sustainable in its current form.
“The way the original law was put in place is not sustainable and therefore the revisions now taking place,” he said.
Zimbabwe was, however, different from South Africa in that most institutions in the country are fundamentally driven by blacks.
That, he said, should give indigenous    people the leverage to work out empowerment deals in a manner beneficial to the country.
“Young men and women can see what we have done and try to emulate,” said Mutasa.
And there is too much to learn from Mutasa, who recently surprised the market after an unexpected feat that raised the Zimbabwe flag high: Listing Masawara Plc on the London Stock Exchange’s Alternative Investment Market (AIM).
“The intention was never to take the market by surprise,” he said.
It was his intention to bring capital into Zimbabwe, and over three years, he weighed several options, one of which was to scrounge for funds on the local market, which has no capital.
“If it’s there, it’s privileged,” he said about Zimbabwe’s capital market.
South Africa was another likely source, but the “emotional negativity on Zimbabwe is stronger in the capital markets of South Africa than elsewhere”.
“I didn’t think I’d get the same positive outcome from South Africa as I did in London,” he said.
How about China? In any case, Zimbabwe had adopted a Look-East policy under which it has strongly mobilised business relationships with the Chinese and other Asian countries.
“I am not extremely familiar with the potential . . . I was not sure my story would make sense to Chinese investors,” said Mutasa.
Although London still holds that “emotional negativity” over Zimbabwe, Mutasa noted that it had “a broad capital market so I thought there would be a section that would listen to my story”.
Indeed he got an audience, but the challenge in London was to present a compelling story to investors and Mutasa and his team pitched their argument around four key investment advantages in Zimbabwe: human resources, mineral resources, tourism resources and agricultural resources.
“Zimbabwe has a compelling advantage in the sense that even according to the World Bank it is going to grow at an average of five percent per annum for the foreseeable future. There is a compelling opportunity for fresh capital . . . We had to highlight our belief in the safety of capital in Zimbabwe,” said Mutasa.
After over a decade of an unprecedented political and economic crisis, Mutasa said     he was confident Zimbabwe would not      drift back to “that pain again” — hyperinflation, exchange rate volatility, and political hostility.
Mutasa had the option to create a fund into which investors would put their money for opportunities in Zimbabwe, the same way Lonrho Plc did with LonZim, and then earn a fee from managing the fund.
But he had a totally different perception of how he wanted to drive this new initiative.
“I wanted to do something that would continue to ignite my passion,” he said.
So, he took his investments in TA Holdings Limited, as well as his stake in Joina City, named after his mother, and bundled them into Masawara, named after a very close family member.
With a good asset base, he packed his bag for London, showing investors the good assets in Masawara’s portfolio and asking those willing to put in additional cash into the firm to grow the asset base.
“I was not selling off. I thought the better strategy was to put in my assets so that I would be at risk just as much as they’re at risk,” said Mutasa.
Masawara took up a 40 percent interest on the imposing property project, Joina City, the largest commercial and retail building in Harare, and a 30 percent stake in TA Holdings, which Mutasa holds directly and indirectly through associates.
Fund manager, Neil Woodford, who runs more than £15 billion in assets, snapped close to 30 percent by buying all the shares in an initial public offer in Masawara for US$25 million. Masawara’s value on listing was at US$88 million.
Masawara expects to raise another US$75,2 million in a follow-up offer within the next six months.
Under terms agreed with the central bank and government to allow the release of assets into the offshore investment vehicle — Masawara has a listing in London but is registered in Jersey — Mutasa and his associates    are to retain a 66 percent stake in the company, but could whittle it down to 51 percent with approval from regulators.
“What the AIM (Alternative Investment Market of the London Stock Exchange) process forced us to do was to ensure that everything was compliant with the laws, not only of London, but of Zimbabwe as well,” he said.
A normally reserved person not fond of the limelight, the London market had to force him out of the cocoon because of its rigorous disclosure policies.
“Listing of Masawara has really made me realise that the nature of global capital is centred on good governance and compliance (with regulations). The due diligence undertaken on our organisation was extremely thorough. I personally am very proud of my team in that they proved to the London market that our organisation is an extremely ethical one and passes the scrutiny,” he said.
A board of directors familiar with the London market has already been put in place at Masawara. Mutasa will leave TA Holdings, where he is currently executive chairman, to become chief executive officer of Masawara. He will remain as non executive chairman at TA Holdings, and the hunt is on to identify a suitable CEO for TA Holdings.
But he’s not moving to London in his new role.
“The core operating structure will be in Harare,” he said.
Masawara is expected to increase its interest in TA Holdings to a minimum of 40 percent.
“We fully believe in the economic opportunity in TA,” said Mutasa.
It will be interesting to find out how far this goes in just a year. But it’s difficult not to trust Mutasa after a remarkable feat at TA Holdings.
He’s going to Masawara with the same strategy: avoid being greedy, and be realistic of the impact you’ll make on certain investments and, above all, be sure to get good cash generating assets.
But he admits that at Masawara, he might require a new model. But I guess just in terms of how fast he’ll pounce on new opportunities.

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