$10m Twin Palm shopping mall open for business
The Twin Palm shopping mall opened its gates to customers last week. It cost $10m to develop over a period of two years by PMTP Zambia and will be managed by Knight Frank Zambia. The mall has 26 stores with a combined workforce of 500 and boasts Shoprite as its anchor tenant. The shopping mall is adequately positioned to cater to residents of Ibex Hill, Avondale, Salama Park and Chainda.
In a year when lending rates have been as high as 28 percent, Madison Financial services (MFS) has positioned itself to start tapping cheaper capital by listing on the Lusaka Stock Exchange. MFS will become the 23rd listed entity on the Lusaka Stock Exchange (LuSE) after they closed their Initial Public Offering last Friday. They also become the 3rd LuSE-listed domestic company with a presence outside of Zambia. The LuSE is up over 15 percent year-to-date despite an economically shaky first half of the year, making it a relatively attractive time to launch an IPO.
The Lusaka Stock Exchange (LuSE) has continued-on from a strong 2013 to close the first half of 2014 at 6,111.15, up 15.3%. The market capitalization was at K28.1bn (K62.3bn including Shoprite) as of yesterday, June 30th 2014:
First Quantum Minerals acquires Argentina's Lumina Copper Corporation
Canadian mining giant First Quantum Minerals (FQM) acquired Lumina Copper of Argentina in a $470m dollar cash and stock deal. The $10 per share cash portion of the deal will represent a 28% premium over Lumina'sJune 16 2014 closing price on the TSX Venture Exchange. The project will boost copper production to over 1.3 million MT by 2021. This is FQM's second acquisition in the space of 15 months after completing the the Inmet Corporation deal in 2013.
Lafarge Zambia floats additional shares as it gets closer to LuSE 25% Free Float threshold
Lafarge floated more of its shares on the Lusaka Stock Exchange which reduced its parent company's holdings to 77.37% from 84% -- 2.37% away from LuSE's Free Float Compliance program which requires any firm listed on the LuSE to float at least 25% of shares to be available for day-to-day trading. Lafarge received bids in excess of 25m shares for an available 18m which shouldnt be surprising because the stock is up 65% year-to-date on the back of blockbuster earnings in 2013. Profit after-tax increased by 14.6% to K338m in 2013.
Bank of Zambia postpones policy rate decision
The central bank postponed the policy rate for May 2014 to next week Friday. In addition, they also announced that they would reduce the frequency of policy rate meetings from monthly to quarterly in order to give them more time to analyze the macroeconomic environment.
Energy Regulation Board increases the price of petroleum products
The prices of petrol, diesel and kerosene were increased by 7.2%, 8.5% and 9.45%, respectively. This means that effective April 18 2014, the new pump prices of petrol, diesel and kerosene are now K10.63, K10.01 and K7.48 per litre, respectively. The ERB cited Kwacha weakness as the main driver of the decision to increase prices. Last year's increase was due to the removal of fuel subsidies.
Zambia imports finished petroleum products through a costly and inefficient supply chain - it also does not help that Indeni Oil refinery has obsolete equipment! The ERB sets pump prices so that they cover the cost of importation - so if the cost goes up (because of Kwacha depreciation), then pump prices have to go up to compensate otherwise the ERB would lose millions of Kwacha each time petroleum products are imported.
This is a logical move but will be very unwelcome by consumers because it will force retailers to raise prices of various goods i.e. inflation will pick up - maybe above 8% over the next few months?
So will this decision be reversed should the Kwacha start regaining its strength? Zambians already pay some of the highest gas prices in southern Africa. In the meantime, perhaps it would be prudent for the ERB to hedge this currency risk on say, the Bond and Derivatives Exchange before they come up with a final solution on Zambia's fuel problem?
Zambia issues $1bn dollar bond
The government issued a second successful offering albeit at steeper conditions than the debut bond. The funds have been pledged to the transport and energy sector but with no specifics as of yet. What is most important now is the execution - this money needs to be put to work efficiently, more efficiently than the pace at which the $750m was utilized. The quicker the projects are done the quicker the pay-back period will be...
Batoka Energy Holdings (Ireland) Ltd is set to make a mandatory offer of K526.2m (K0.6746 per share) to Copperbelt Energy Corp. minority shareholders after acquiring 40% of Zambia Energy Corp. (ZECL) as part of a reorganization of ZECL announced in a cautionary note in Q4 2013. The 40% was previously held by institutional and retail investors. Here’s a chart showing the owner-subsidiary relationships before this change:
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *