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Shareprophets quizzes serial entrepreneur David Lenigas about his latest AIM listed vehicle - Afriag (AFRI) which is a relatrive newcomer, via reversal into a shell, onto AIM.
Q1. David, given the relative novelty of Afriag as a listed vehicle many will not have heard of it, Could you enlighten us as to what it is that the company aims to do?
DL. There is a great opportunity in Africa for someone to establish the first true pan-African Agri-Logistics companies. I have teamed up with Paul de Robillard my old partner in this sector from when I ran Lonrho who built the foundations of the main part of Lonrho's business today. His experience and expertise are unquestionable. AfriAg is working to secure some very important and key contracts with major growers and exporters of agricultural produce and utilise our experience to competitively compete in an underserviced and obscenely overpriced market.
The business does not require a great deal of working capital from the Plc at this stage, as AfriAg is as stated, a management company. We focus on taking margin from the logistics chain and specialise in getting produce from source to the end destination where-ever that is in the world on time and at the best price. We have a good track record historically of this. The Plc will receive regular dividends from its associated companies which will form the basis of a growing balance sheet and cash flow.
We will be looking for a number of Paul de Robillard partnerships over the coming year to expand our logistics network across the African Continent. In 3-5 years, we will strive to have an office or representative office in all 55 African Counties.
Q2. Currently the market has found buyers into the Afriag story including yourself, having secured a large stake in the business could you clarify the significance of this position and its advantage or security this may hold as Afriag brokers new deals?
DL. I have been actively involved in building a number of Companies on the LSE over the past decade, 4 of which have now been taken over for significant sums of money. I never really had a significant personal shareholding in any of these ventures, so it was and is important that I am one of the largest shareholders in AfriAg as we grow this business from the ground up. The board has a good plan to grow AfriAg quickly and we are focused on this. I would like to buy more shares, but unfortunately, due to the rapid growth I expect at AfriAg, I see that I will be in a continual closed period and therefore I cannot increase my holding much further.
Q3. I see that you have teamed up with Paul de Robillard who clearly has a wealth of experience out in Africa along with a significant holding in the business. You announced on 12th July that Afriag will be looking to reach out to affiliated parties and companies working closely to provide excellence within your field. Could you give a simple appraisal of how this will be rolled out and its potential impact on the company from its current position?
DL. AfriAg South Africa will be the first of a number of partnerships we will ultimately seek to put in place around Africa. Paul has excellent business experience in southern Africa, but we will be seeking similar partnerships in north, east and West Africa. I can't say any more than this at this stage. I am not planning on issuing further shares for these partnerships at this stage. The model is still developing.
Q4 David you are fast becoming the benchmark for those that can go right and some not so, Without focusing too much on the 'what ifs' could you explain to investors your track record over the past decade?
DL. BDI Mining - Took control at 1.5p. Taken over for 37p.
Cambrian Mining and Western Canadian Coal - Cambrian was on the old Ofex Market and Western
Canadian Coal was at 3 cents on the Canadian Exchange. 5 years later, the group was taken over for more than $3 billion.
Lonrho - Took the Company that was being closed down in 2005 to a cash bid of $300 million after expanding the business from 1 solitary hotel in Mozambique to a conglomerate operating in over 20 countries in Africa and employing 10's of thousands of people on a direct and indirect basis. Did the bidder for Lonrho get it too cheap? I feel so. But this is the market we live in today.
Other Companies like AfriAg, Leni Gas & Oil, Solo, REM and Polemos are work in progress. Now that I have properly ceased any association with Lonrho, I can now properly focus on these.
Q5. What is Afriag’s attitude to responsible housekeeping regarding salaries, expenses and remuneration?
Directors get paid £2,000 a month, myself included. This may be reviewed upwards as the business grows. You can't feed the wife and kids with Scrip. Some folk have criticised me in the past for how much I got paid at Lonrho. Mainly short term holders of the shares and particular institutions. I find their stance somewhat strange as some of the richest folk on the block are indeed fund managers who have no need to report the sorts of pay they get.
Let me tell you, some of these guys get paid obscene amounts to run your money. At Lonrho, I was the boss of all the subsidiaries with sizeable personal risk. My argument was always: find someone else to do the job for less.
Q6 Investors in small cap companies must weigh potential value against equity risk? How much risk is there at Afriag and how do you intend to reward its investors?
DL. Investing in microcap shares is always a risk. You may as well go to the roulette table sometimes for better odds. What I am endeavouring to do at AfriAg is build a low risk business that requires minimal capital. I think I have found a good formulae for this.
Rewards for shareholders will hopefully be a better share price and hopefully dividends. I really want AfriAg to be a dividend stock. Investors need to look at AfriAg as a long term investment. Short term traders will always win big or lose big and those that lose big in the early days because of margin trading etc always seem to blame management because they got margined out of their position. I never invest money I don't have. I wouldn't even know how to margin trade or trade in CFD's.
Q7. Clearly you are motivated and Paul needed no introduction to the potential value you both offer early buyers in the company. Do you have any message to the market with direct relation to Afriag and its current journey?
DL. All I can say to this is the journey has just started. The first steps of a long march. We feel we have a good lowish risk plan to build the business and there are lots of opportunities to expand very quickly with the experience we have. Paul and I are not in this for the short term. If we can create the first true pan-African agri- logistics group, we will be in the corporate sights of the majors as we would have achieved what few have tried and succeeded at before.
We cannot grow a business on thin air so dilution is something of a need which we will consume sparingly. I want to state for the record now, that I don't want to dilute at this price and if we do raise funds, it won't be a lot as the board and major shareholders will be trying to avoid unnecessary dilution.
David I would like to thank you for taking the time to speak with us here at shareprophets.com
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