No More Lenigas

Quick note on my favorite African company

By Travis Johnson, Stock Gumshoe, September 13, 2012

The Executive Chairman and builder of the modern Lonrho (LONR in London, LNAFF on the pink sheets), David Lenigas, has stepped down … and the stock’s going up.

That’s not shocking, nor will it probably lead to much different happening at the company given the tack they were already on, but it seems to have encouraged at least some shareholders that the corporate oversight might become a bit stronger. David Lenigas is a brash, highly paid salesman and company builder who’s on the boards of several junior companies, and he has certainly turned off some shareholders in the past with his compensation levels (self-approved, pretty much) and bold predictions.

Perhaps most importantly, this signals to me that Lonrho management really does believe that they’re into the next stage of their growth, turning their companies into well-managed and profitable enterprises rather than investing heavily in their creation and initial capital needs. Lenigas always struck me as a company builder and pitch man more than a day to day management and efficiency person — and though he wasn’t the CEO when he stepped down today (he was Executive Chairman, Geoffrey White is CEO), he might as well have been. Now the roles of Chair and CEO are going to be clearly different, which is usually a good thing for corporate governance, with Ambassador Frances Cook, an American expert on Africa and business consultant and formerly the lead independent director, taking over as Chair of the Board.

Lenigas is leaving to focus on FastJet, which is the spun-off airline that Lonrho gradually built up over the last few years (under the Fly540 name) and still controls — which is appropriate, because brashness and salesmanship and strategic boldness are certainly key characteristics for the builders of airlines, and FastJet is very much a company that’s setting off on an aggressive growth track. Lonrho’s ownership of FastJet will dilute over the coming years as FastJet raises more money to build their fleet, but they should still profit nicely if the airline becomes the successful continent-wide discount international airline that they’re hoping to build.

Lonrho shares have recovered substantially over the past couple weeks and are up 25% just in the last week, partly because of returning optimism in Europe (the shares trade in London, though all operations are in Africa) and partly due to some large investors buying and some good (but relatively ...

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