FUNDVIEW-Zimbabwe fund seeks $100 mln to ride recovery

Mon Aug 2, 2010 9:23am EDT

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By Chris Vellacott

LONDON, Aug 2 (Reuters) - A investment fund plans to raise $100 million to buy assets in Zimbabwe ahead of a hoped-for bounce back from the country's status as an economic basket case.

Masawara Plc has already secured a $25 million commitment from one of Britain's biggest investors, Invesco Perpetual's Neil Woodford, and its managers hope to achieve a total capitalisation of around $155 million.

The new vehicle will invest in sectors where the breadbasket-turned-pariah has a perceived comparative advantage, such as mining and agriculture, its manager, Shingai Mutasa, told Reuters on Monday.

It also plans to invest in other capital-starved areas such as telecommunications and real estate as well as snapping up assets in an expected wave of privatisations as the cash-strapped state moves to sell its holdings, Mutasa said.

"When we pitched to Mr Woodford he was intrigued... I get the feeling he sees this as a new frontier," Mutasa said.

Woodford, who runs more than 15 billion pounds ($23.72 billion) in assets, will take close to 30 percent of the fund by buying all the shares in an initial public offer for $25 million, implying a market capitalisation of $80 million.

The remaining shares are owned by the fund's management.

After the offer Masawara will be listed on AIM, albeit with negligible liquidity or trading volumes, giving it the exposure and transparency Mutasa hopes will pique the interest of others.

Within six months, the company expects to launch a follow-on offer amounting to a further $75 million of new invesmtent, Mutasa said.

"We don't believe $25 million is a lot of money in terms of the opportunities in Zimbabwe. We believe the moment that is spent we will immediately come back to the market," he said.

The initial portfolio comprises a 40 percent interest in a commercial real estate development and 30 percent in Harare-listed TA Holdings, an investment company with shares in insurance, agricultural businesses and hotels.

Zimbabwe has struggled with macroeconomic crisis in recent years, and inflation reached an annual rate of 231 million percent in July 2008 before the country stopped announcing figures. [ID:nLDE63H02R]

Inflation was brought under control with the adoption of the U.S. dollar and other foreign currencies while political unrest has lessened since President Robert Mugabe and his rival Morgan Tsvangirai formed a power-sharing government last year.

"The hyperinflation era and difficult political environment over the last 10 years sapped most Zimbabwean businesses of capital and we see a massive opportunity in the rebuilding of the Zimbabwe economy over the next five to 10 years. We're pretty confident this is the right time to start putting money in," Mutasa said. (Reporting by Chris Vellacott; Editing by Michael Shields) (For the Funds Hub blog: blogs.reuters.com/hedgehub) (For Global Investing: here)

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