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A roaring Zimbabwe lion goes to London Patterson Chiweshe Karen Frisch Sergio Penchas Denis Rappaport 1 Zimbabwe Main Facts Zimbabwe nation was created in 1980. Single political party dominance since 1980 with relative political stability. One of the most diversified African economies-25 % GDP from Manufacturing. Economy has been previously closed to foreign investment. 2 Meikles Africa Limited More than a 100 years of established operations. 4 divisions: supermarkets,hotels, department stores and corporate. Revenues of U$170 Million in 1996(3.8 % of GDP). Revenues CAGR (93-96) of 7% in real terms 3 Private Placement International private placement of US$ 75 Million (33% of company capital) Why a private deal – Size of the transaction – Sovereign risk – Easier placement to sophisticated investors 4 Discount Factor - Risk Considered Characteristics of the company Domestic costs and revenues structure Low domestic competitive environment Entry barriers – Strong alliances with South African companies – Proceeds of private placement to highly internally invest 5 Discussion’s Topics Discount Rate – Risk considered – Time varying discount rates – Terminal discount rates How to mitigate risks Additional information required to invest 6 Valuation PV of Cash Flows (1997 - 2006) PV of Terminal Value (from 2008 on) Debt Cash Total Value of the Firm Share Price 104,927 131,533 14,476 9,362 231,346 1.57 7