Innscor Africa Limited: The corporate investment juggernaut case

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If there is something that investors should know about Innscor Africa Limited, the massive Zimbabwe Stock Exchange listed conglomerate, is that it is everywhere. Literally.

The company has its tentacles in every sphere of the Zimbabwean economy and its influence is felt throughout southern Africa. The conglomerate company made the news a few weeks ago towards the end of September when a story broke over the news wires that the company had successfully applied to the Zimbabwe Stock Exchange to delay publishing its financial results for the year.

The statement by the company’s company secretary Andrew Lorimer attributed the delay of the all-important financial information to the company’s auditors who were said to be finalizing the audit review of the conglomerate’s books.

  • Innscor Africa Limited, the Zimbabwe Stock Exchange (ZSE) listed conglomerate has companies and operations virtually in every sphere of the Zimbabwe economy.
  • The company is due to publish its end-of-year results on the 31st of October 2022 and is expected by analysts to report increased volumes of business across its expansive portfolio.
  • The company celebrated its 35th birthday this year. Innscor Africa Limited first began its operations in 1987 with a single fast-food outlet in Harare and has expanded into a diverse array of businesses ranging from milling, manufacturing, crocodile breeding, automotive, meat processing and agriculture.

Investors generally do not take news of a company delaying publishing its financials well. It is normally a sign that the company is not in a sound financial position and that there is a big hole in the books that management is trying to keep investors from knowing about. Innscor Africa Limited is no such company. It’s a solid investment proposition and a darling of the market to the extent that it is a staple in many an investor’s portfolios.

The conglomerate turned 35 in 2022. The company started with a single fast-food outlet on Speke Avenue in Harare, Zimbabwe which it named Chicken Inn. Fast forward 35 years to 2022, this is what the company looks like:

Innscor Africa Limited Group Structure

Today Innscor Africa Limited is involved in flour milling, meat packing, bottling, packaging, and light manufacturing. This is a summative description of the conglomerate. These divisions house a listed company which has been operating in Zimbabwe for almost 100 years. This company is National Foods Limited. It is arguably the jewel in the Innscor Africa Limited crown.

  • The company is responsible for several offshoots that have listed on the Zimbabwe Stock Exchange namely, Padenga Holdings Limited, Simbisa Brands, and Axia Limited.
  • Innscor Africa Limited reportedly has a market capitalization of approximately US$ 230 million from its portfolio of businesses over its 35-year history. Its businesses included listed companies as well as unlisted ones.

Not to be misunderstood, the Innscor Africa crown has plenty of jewels.

The other listed entity in the Innscor Africa stable is Colcom Foods which is produces and processes pork for the local and export markets. These but a few of the companies it has a controlling or outright interest. When one considers the litany of companies Innscor Africa has unbundled or spun off to investors, it becomes apparent how important a fixture this conglomerate is to the Zimbabwean economic and investment landscape.

Padenga Holdings Limited the crocodile breeder and gold miner was once part of the Innscor Africa group. It was spun-off to investors in a dividend in specie in 2010. A dividend in specie is when investors are rewarded with shares instead of cash. So, when Padenga was unbundled shareholders in Innscor Africa received shares in Padenga Holdings Limited relative to the shares that they already held in Innscor Africa. Padenga Holdings Limited is not doing badly.

The company is making money hand over fist from its gold mining activities which have fast eclipsed its crocodile business. Padenga Holdings was initially listed on the Zimbabwe Stock Exchange’s main board but migrated to the United States dollar-denominated VFEX. Simbisa Brands is another scion of Innscor Africa. It was unbundled from the group and listed separately on the Zimbabwe Stock Exchange. Simbisa Brands houses the fast-food interests that Innscor Africa accumulated over the years and are spread across Zimbabwe and span the southern region of the continent as far as Ghana.

Zimbabwe Stock Exchange outlook in the face of dollarization

Axia Limited is another of Innscor Africa’s off-shoots. The company was also spun-off from the parent company and listed separately on the Zimbabwe Stock Exchange. This company deals in automotive products and services. According to Barron’s magazine, Innscor Africa Limited has a market capitalization of ZWL$ 158 billion.

Depending on which exchange rate is used, this translates to approximately US$ 230 million. This is not a small change. The company that Zinona Koudounaris and Michael Fowler founded has come a long way from its very humble roots as a lone fast food outlet in 1987. As can be expected from any business entity that reaches and enjoys Innscor Africa Limited’s success, the company has as many critics as it has admirers. It has also been in hot water competition authorities for what they have called improper business practices.

Business Weekly in June 2022 ran a story where the company had been fined a staggering US$ 9 million and ordered to divest from one of its key subsidiaries, a company called ProBrands. The Competition and Tariff Commission levied the fine for what the paper called “consummating the merger of one of its subsidiaries without the Commission’s approval”. The Innscor subsidiaries whose operations had merged are Ashram Investments and Amiata Investments.

The Business Weekly reported that “Allegations are that in December 2019, the Commission received a post-merger notification of the transaction involving subsidiaries of Progroup Holdings (Amiata Investments) and Innscor Africa Limited (Ashram Investments).

  • The company is a darling on the ZSE with shares regarded as a staple by investors.
  • Due to its aggressive expansion strategy which is biased towards mergers and acquisitions than it is on organic growth, Innscor Africa Limited has on more than one occasion had run-ins and confrontations with the authorities.

The transaction was consummated in June 2016 where Progroup Holdings underwent a Scheme of Reconstruction which resulted in Ashram Investments – a subsidiary of Innscor, injecting USD$2,38 million into its subsidiaries Probrands and Probottlers.

Post the Restructure, in January 2018, Probrands disposed of its dairy assets to a newly incorporated company, Prodairy, a dairy and dairy products processor.”

The company has a long history of brushes with the law.

In 2013 Innscor Africa Limited was fined US$ 60 million for not following the proper procedures in its acquisition of majority shareholding in National Foods Limited in 2013. The CTC, after conduction investigations on the transaction, found that Innscor acted against regulations when it purchased a majority interest in National Foods.

Innscor Africa Limited as in its most recent run-in with CTC did not notify them of their intention to acquire a majority stake in National Foods Limited which is a contravention of the Competition Act.

Most recently, Innscor Africa’s executives courted the ire of Zimbabwe’s deputy president Retired General Constantino Chiwenga who summoned them to a meeting with him and told them that he would deal with economic saboteurs as enemies of the state. The Zimbabwe Independent reported that the meeting that is said to have taken place in May 2022 left the executive of the conglomerate visibly shaken.

The company was accused of fueling currency volatility on the parallel market resulting in runaway inflation because of its vast operations. The president and his deputy summoned the conglomerate to government offices to explain its borrowing history before the government directed banks to suspend lending. The reasoning was that companies and individuals were borrowing from the banks to purchase foreign exchange from the parallel market. This subsequently precipitated the fall of the Zimbabwe dollar and drove up prices in the process.

Notwithstanding, Innscor Africa Limited, when it is not upsetting regulators, is an attractive investment proposition. It has a 35-year track record and history of creating, buying, and selling off successful businesses. An investor looking to develop a portfolio of listed Zimbabwean companies needs to have this company high on their watchlist. Investors will be waiting with bated breath for when the company will publish its financial results at the end of October 2022.

The evolution of Innscor Africa Limited over the company’s 35 year history.

Also read: Fitch projects Zimbabwe economic growth slowing in 2022

I am a financial services professional with a strong background in diverse areas of banking. My skill set includes among others International Banking, Trade Finance, Commercial Lending, Customer Service, Finance, Banking, Corporate Finance, and Investment Banking. Africa is my home and I am passionate about its development,

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