The Exit of Tim Pollock. Why leave when you are winning?
Zambeef Products Plc
Tim Pollock heads back to the UK

When the UK’s development finance institution, the CDC Group, announced its acquisition of a 17.5% equity stake in Zambeef Products for $65 million in 2016, the local food industry was taken by storm. Not only did this investment show the confidence in the Zambian local food industry, it showed that Zambeef was ready to scale up even further.

 

At the center of this deal was out going Co-CEO Tim Pollock, who had his fingers in the deal from the very beginning. At the time the deal was being structured, Tim was CDC’s investment director for food and agriculture and listening to the interview he gave to Kate Douglas of how-we-made-it-in-africa, it was clear that that CDC had a strategic mission for Zambeef.

 

To start with, the USD 16 million was used to reduce the gearing of the company. The long term debt have weighed heavily on the company’s books, and equity sale is one of the best ways of attracting liquidity that would reduce this debt.

 

In addition, the equity funds would be used for future capital projects. Tim was clear in the interview that CDC had a desire to see improvements in the core parts of the business that included expansion of the animal feed business that saw Mpongwe come online and become one of the business value creators for the company.

 

Furthermore, enhancing their macro outlet strategy was crucial to the deal. With CDC money on the table, zambeef has grown its macro outlets to 207 as at March 2018. In addition, investments have also been made in improvements of the cold chain warehousing business. Consequently, their dairy product business, Zamhatch and Zamchick have also been beneficiaries to this investment.

 

Tim was very clear when he joined the Zambeef board. He would focus on their core business. It is not surprising that non-performing assets such as Zampalm were among the casualties of a fire sale as they did not fit into the new suitor’s plans. Needless to say, the investment in Zampalm saw the company invest over $20 million (according to financial statements from 2009 from Zambeef) in an entity that must have been a difficult sale when CDC came on board. One can see the passion and commitment that the Francis Grogan and Carl Erwin had for this project. However, the boardroom is a different playground and as such Carl showed himself the door citing personal reasons.

 

Tim’s resignation does come as a shock for us at Financial Insight, because CDC coming on board was a signal that as shareholders in the company, we would expect our first dividend in accordance with the statement in their 2016 annual report which indicated that there would be a change in dividend policy going forward. No doubt, return on investment is a key attraction for CDC who, through Tim’s statement during the interview, are in it for the long term. No early exit for the investment firm.

 

Tim was bull on the prospects of the company albeit with tumbling exchange rates he expressed confidence in the GDP projections of 5 to 6% over the near term. Furthermore, he was also confident that the macro would stabilized. Fast forward to present day, Dr Jacob Mwanza indicated in a recent SENS Announcement stated that “The volatile economic conditions in Zambia over the previous two years, including sharp depreciation of the Kwacha against the US Dollar and relatively high inflation, presented challenges for the business. I am pleased to say that this period of uncertainty appears to be behind us. We are entering a period of relative stability in the economy, supported by tight fiscal and monetary control by Zambia’s Ministry of Finance and the Bank of Zambia.”

 

From Dr Mwanza’s statement, it was clear that Tim had foresight. We wish him well back in the cold wet UK.

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