Zambia Forest lists on Lusaka Securities Exchange

Zambia Forestry and Forest Industries Corporation PLC today (12 February) brought welcome relief to the Lusaka Securities Exchange when it broke a 6-year listing drought. The listing was for the full 400 million shares, after an offer of 160m shares (40%) at ZMW2.06 each to raise ZMW330m ($22.5m). The forestry firm will use the proceeds from selling 70m of these shares for working capital, expenses and capital spending.

Zaffico is the biggest company in establishing, managing and selling exotic roundwood in Zambia and manages 51,659 hectares in pine and eucalyptus plantations plus some 50,000 hectares of unplanted land. It sells mature trees harvested as well as poles for transmission, fencing and construction.

According to the prospectus, dated 6 December, the total share offer included a sale of 90m shares from Zambia’s state-owned Industrial Development Corporation (IDC). The offer opened on 11 December. The sponsoring broker is Pangaea Securities. It was the LuSE’s first public offer and listing in 6 years since Madison Financial Services in mid-2014. The share offer was extended by 8 days but closed on 29 January.

In the financial year 2018, Zaffico’s revenue was ZMW244.7m (up from ZMW208.2m in 2017), earnings before interest, tax, depreciation and amortization (EBITDA) was ZMW163.5m (ZMW148.2m) and net profit was ZMW119.6m (ZMW114.5m). Zaffico has also been authorized to sell confiscated rosewood mukula logs and logs harvested before harvesting mukula was banned. In August 2019 it was reported that the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) had decided to include mukula trees in its Annex II listing. Rosewood has a high value in China for making furniture and is being widely harvested across Africa while Zambia has imposed bans and lifted them from time to time (Lusaka Times estimates that some $2bn of mukula revenue was stolen by a cartel).

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