South Africa

PPC may sell Zimbabwe business

PPC, South Africa’s largest cement maker, is considering selling its Zimbabwe business for about $200 million, according to people with knowledge of the matter. The shares surged.

A sale will help the company, founded in 1892, focus on its South African operations, said the people, who asked not to be identified because discussions are at an early stage.

Pricing negotiations are ongoing, and there is no guarantee that a deal will go ahead, they said. PPC’s shares surged as much as 24% in Johannesburg, taking the company’s market value to R4.8 billion.

Should the sale materialize, the proceeds “would be a significant inflow that can be used to either pay down debt or invest for future growth,” Lester Davids, an analyst with Unum Capital Ltd., said by email.

The company had R1.5 billion of debt as of September and is positioning itself for new road construction orders from South Africa’s highways agency.

Meanwhile, some overseas investors are exiting Zimbabwe as it grapples with a currency crisis and the world’s highest inflation rate.

Holcim sold its business in the southern African nation last year to a local firm. US sanctions on many of the nation’s politicians and business people also stymie investments.

The PPC unit in Zimbabwe has attracted interest from a local company involved in road and home building, the people said.

PPC manages to conduct about 80% of its Zimbabwe sales in US dollars, driven by demand for its products in mining, residential construction and government-funded infrastructure projects, according to the company’s trading statement.

Demand for the building material is expected to expand to 1.6 million tons this year, an increase of about 60% from 2017, according to PPC.