Jittery M&R exits Zimbabwe in 47% stake sale

2012-05-19 14:54

Construction company Murray & Roberts Zimbabwe (M&R) has sold its stake to a Zimbabwean-owned consortium as jitters over the country’s indigenisation programme take root.

Zumbani Capital has taken over the South African company after it bought the 47% stake previously owned by M&R South Africa.

With this transaction, M&R will no longer have exposure in Zimbabwe.

Zumbani Capital paid just $1.5 million (R12.4 million) for the stake earlier this month, in a transaction that totalled 99 792 515 shares.

Economic observers point out that M&R South Africa’s withdrawal “did not make sense”, as the construction sector in Zimbabwe had shown signs of growth since last year at 1%, with a forecast in 2012 of a 1.5% rebound after years of liquidity challenges.

Economist Eric Bloch said the exit could be linked only to fears of the indigenisation programme and political instability that could be triggered by the call for elections being made by President Robert Mugabe’s Zanu-PF.

Zumbani Capital is linked to Canada Malunga, the former M&R chief executive, and Paddy Zhanda, a businessman-cum-politician with ties to Zanu-PF.

Zhanda is a Member of Parliament for Goromonzi North and is chairman of M&R Zimbabwe.

Other Zumbani Capital-linked directors are Samuel Sithole and Malcolm William McCulloh, who both live in Johannesburg.

Sithole is the former group financial director of Brait SA, a firm listed on the Luxembourg Stock Exchange, whereas McCulloh is the former executive director of M&R Holdings and is chief executive of M&R Contractors.

M&R Zimbabwe has been listed as a public company on the Zimbabwe Stock Exchange (ZSE) since 1974, and boasts contracting and manufacturing divisions.

The contracting divisions are M&R Construction Zimbabwe and Pro-Plastics.

But as part of the conditions of sale, the new owners of M&R Zimbabwe must change the name of the company in 90 days –a rebranding exercise analysts say will hurt its esteemed international image.

The deal has already received regulatory approvals from all the relevant authorities, such as the youth development, indigenisation and empowerment ministry, and the Reserve Bank of Zimbabwe.

Meanwhile, it is understood that a raft of board changes are also on the cards at M&R Zimbabwe to reflect the new ownership structures, although it still remains unclear whether there will be a shake-up at management level as well.

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