THE Zimbabwe Association of Pensions Funds (ZAPF) recently hosted the 5th edition of the Principal Officers and Chairmen’s Convention in Bulawayo from October 7 to 9.
Key discussion topics covered regulations, innovative investment strategies, the macro-economic environment, emerging trends in the global pensions industry and will need to embrace a culture of collaboration so as to tap into emerging investment themes playing out in the environment.
Generally, a collaborative approach allows institutional investors to pool resources, share risks, and gain access to investment opportunities that might be beyond the reach of a single investor.
Co-investment funds enable investors to directly invest alongside other funds on specific deals or projects. One exciting project that was also pitched during the Convention is the Unified Councils Pension Fund (UCPF) Victoria Falls Hotel.
The project involves the establishment of a 57 bed, 3-star hotel in Victoria Falls by UCPF, a retirement fund which was formed to provide pension benefits to its members on their retirement through age or ill-health and for their dependents in the event of death.
UCPF is a long-term investor whose return objectives are a combination of both income return and capital appreciation. The project site is located at stand number 1354 in Victoria Falls, which is a suitable land for a medium/high end facility and is on approximately 1,4 hectares.
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It involves the construction of semi-detached units each and will include water reticulation, installation of sewer lines and septic tanks, construction of roads and road widening of strips.
It will also entail provision of services such as power supply, water supply, sewage disposal, solid waste management and road networks. Cresta Hotels will operate the hotel on a long-term lease.
UCPF is, therefore, inviting prospective investors (Pension Funds and Insurance Companies) to participate or co-invest in the project. The total cost of the development is US$6 147271,38.
The promoter will contribute land valued at US$1 million and inject US$2 151 544.98 in the project, implying that it will retain 51% in the project.
The capital call is for US$2 995 726,40, representing a 49% equity stake in the hotel.
The project is shovel-ready having obtained all necessary approvals such as the environmental impact assessment, development permit and has approved plans and detailed architectural designs.
The project also has prescribed asset status, making it a relevant investment asset for pension funds and insurance companies in Zimbabwe.
In our view, the investment case for the UCPF Victoria Falls Hotel is solid. Some of the key investment attractions are as follows:
Recovery of tourism post Covid-19
The tourism industry in Zimbabwe is experiencing a resurgence and is expected to grow by 6,9% in 2024, driven by growing interest from international tourists, increased travel and trade in the region.
The ongoing global tourism recovery and improved accessibility to Zimbabwe has been made possible by improved infrastructure and the entry of new airlines into the country. There is, therefore, a strategic logic for investors to seek exposure in tourism by taking positions in Victoria Falls.
Improvements in air infrastructure
Victoria Falls is a major tourist destination drawing tourists from all over the world to view the majestic Victoria Falls, Zambezi River and scenic game parks in the vicinity, whilst experiencing the rich Zimbabwean culture in a warm and friendly environment.
The completion of the new Victoria Falls International Airport in compliance with IATA requirements is enabling direct flights from major European cities to the Victoria Falls, thereby, creating a tourist hub. This is also complemented by short haul flights servicing tourist destinations within the region.
Development of an offshore financial services centre Zimbabwe has introduced the concept of special economic zones of which Victoria Falls has been designated as a special economic zone (Sez).
This basically refers to a geographically specified and physically secured area administered under a distinct authority, offering certain incentives including more liberal and simplified economic regulations for business to physically locate and operate within it.
Special economic zones have been designed to address some of the public and private sector constraints in the country such as high unemployment, low exports, subdued competition, de- industrialisation, availability of reliable quality infrastructural development and technological transfer.
Sports tourism
Major sporting events have become powerful tourism attractions in themselves, contributing significantly to the image of the country and economy.
In this regard, investment in sport facilities and the hosting of international or regional events is a catalyst for tourism development.
Zimbabwe, South Africa and Namibia will co-host the 2027 International Cricket Council (ICC) World Cup. As a result, Zimbabwe has commenced the construction of a state-of-the-art multi-purpose sports stadium in Victoria Falls.
The 10 000-seat stadium will accommodate various sports, including football, rugby, tennis, hockey, and squash. The stadium will be completed by August 2025 to allow for the necessary preparations for the World Cup.
The new stadium is anticipated to significantly boost Zimbabwe’s sports and tourism sectors, providing a world-class venue for both local and international events.
Overall, the upside will also be realised through promoting domestic tourism. We contend that the UCPF Victoria Falls Hotel is a great addition to investment portfolios given the scope for massive upside in the outlook period.
Buy UCPF Victoria Falls Hotel!
- Matsika is a corporate finance specialist with SwitzView Wealth Management. — +263 78 358 4745 or batanaim@switzview.com.