Private equity firm Brainworks Capital plans to attract international partners to turn around its hospitality and real estate investments.
BY OUR STAFF
Brainworks has 43,14% stake in hospitality group African Sun Limited and 14,88% in Dawn Properties, the owners of hotels leased by African Sun.
The company said it will “invest significant efforts in the coming year to attract international operating partners for its recent investments in hospitality and real estate, and we expect, in the medium-term, a replication of the successful turnaround that we are witnessing with our financial services businesses”.
African Sun and Dawn had contrasting fortunes. In the nine months to December 31 2013,Dawn posted an operating profit of US$ 1 159 890.
African Sun has posted an operating loss to December 31 2013 of US$349 000, as a result of subdued local demand.
Brainworks says it is optimistic performance will improve as the year progresses due to various initiatives that are being planned, including the disposal of the hospitality group’s remaining 16% stake in Dawn Properties. The disposal is expected to realise US$5,5 million.
Brainworks said the advisory role it secured with Atlas Mara was “expected to further deepen our recognition as an emerging advisory firm on the African continent”.
“Our strategy of co-investing with strong international operating partners is showing significant signs of success as we are gradually seeing a growth in profitability in our investee companies, particularly in our commercial banking and consumer finance businesses,” the company said in a letter to shareholders.
In April, Atlas Mara — co-founded by ex-Barclays Plc chief executive officer Bob Diamond and billionaire Ashish Thakkar — announced that it would buy a controlling stake in ABC Holdings. ABC Holdings has banking operations in Zimbabwe, Zambia, Botswana, Mozambique and Tanzania under the BancABC brand.
Brainworks were engaged as the advisors in the transaction. In the outlook, the firm said efforts to list on the Toronto and Zimbabwe stock exchanges would be concluded next year.
Brainworks said it was still to get their fees from the US$1,8 billion worth of indigenisation deals they brokered in the mining sector.
The transactions include the Zimplats deal (US$971 million), Mimosa (US$550 million), Unki (US$142 million), Pretoria Portland Cement (US$28 million) and the Caledonia Mining Corporation (US$30 million).
The transactions could not be fully consummated as various arms of government could not agree on the way forward.
In the financial year ended December 31 2013, Brainworks’ total revenue was US$2,4 down from US$3 million in 2012 generated from unrealised capital gains on listed securities, dividends and interest income.
It said despite involvement in significant advisory transactions during the year, the fees that would have been earned by the group on these transactions was not accrued during the 2013 financial year pending government’s decision on the way forward to close the deals.
Operating and finance costs shot up to US$ 3,9 million from US$2,7 million in 2012.
This resulted in the group posting a loss before tax of US$1,6 million for the year from the US$0,3 million profit before tax in 2012.
