Financial Times30 Dec 2011 11:52
Intersting article in today's FT anout Lonrho -- sceptics and enthusiasts can read into it what they like.....Geoffrey White spends three weeks of every month jetting across sub-Saharan Africa to check investments ranging from nectarine farms in Zimbabwe to a luxury hotel in the Democratic Republic of Congo. The chief executive of Lonrho, the Africa-focused conglomerate, Mr White believes that the company’s assets, in what he calls the “the world’s last frontier”, will bear fruit.
Mr White, who used to give business advice to Gulf royal families, joined forces with David Lenigas, Lonrho’s chairman, to resurrect the 102-year-old company that had collapsed from its heights as a FTSE 100 constituent.“Africa is where Asia was 30 years ago and, in reality, 10 to 15 years in front of people expectations,” Mr Lenigas said, rattling off statistics about the continent’s booming growth. Lonrho, short for London-Rhodesia, had been built into a multi-continent conglomerate by Roland “Tiny” Rowland, its larger-than-life leader who led the company for more than 30 years beginning in 1963. But Mr Roland’s empire unravelled in the early 1990s due to declining metal prices and debt.
By 1993 he was ousted as chief executive. Lonrho’s assets were gradually sold and Lonmin, now a FTSE 250 metals company, was spun out. A lossmaking hotel in Mozambique was the only asset left on Lonrho’s books by December 2005.Enter Mr Lenigas, a mining specialist, who became chairman and convinced the board to once again bet on Africa. Along with Mr White, who joined two years later, the duo have revived Lonrho, which they say still has “the strength of a Coca-Cola brand name” in Africa.
Six years on, their gamble is starting to pay off. They have made investments in agribusiness, infrastructure, transportation, hotels and support services in 17 African countries. Analysts at WH Ireland project that the company’s overall revenues will more than double to £300m ($462m) in the 15 months to December 31 of next year as the financial year is aligned with the calendar year. Pre-tax profits are estimated to increase by 83 per cent to £23m. “We think a conglomerate is a clever way to diversify risk across Africa,” Mr Lenigas said of the company’s broad portfolio.Boasting that Lonrho can get fruit from a Zimbabwean farm to central London in three days, Mr White said the company had integrated every step of the process from cold storage to delivery.
Produce accounts for half of the company’s agribusiness, which is 60 per cent of overall revenues. The other half comes from the company’s fish exports, which are sold to big supermarkets in the UK, US and South Africa.“We don’t think there’s risk in non-cereal farming. If there’s a famine, people won’t come after our green peppers,” said Mr White.But the shares in the
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