by Peter Lees
9. November 2010 23:38
About a year ago the F&C UK Equity Fund took part in a fund raising for Zanaga, to finance the first stage in the development of rich iron ore resources in the Congo. We know the management of this company well and our decision to take part was further boosted by the fact that Xstrata were also providing significant financing for the first stage in proving the deposit’s potential.
Our position was taken on the basis that Zanaga had firm plans in place to float on the Aim market and they have duly announced that this is to take place in late November. We currently expect that the company will come to the market with a valuation in excess of $500m, which should act as a significant catalyst to the current more cautious book valuation.
In 2011 Xstrata will also decide if they wish to continue to be part of the development of this extensive iron ore deposit. If so they are likely to take a 50% stake in the mine, which should then provide a further positive catalyst to the share price.
This shows is the value in us developing and maintaining close links with private companies that have ambitious growth plans.
The current size of the F&C UK Equity Fund means that we can have a weighting to a small number of this type of asset, offering good long-term potential for those able to wait.
