Zim to have first listed agric commodity fund

STRATUS Capital Partners will list its commodity fund on the Financial Securities Exchange (Finsec) on August 11, 2023, becoming Zimbabwe’s first agriculture-based commodity fund.

The Stratus Commodity Fund (SCF) to be listed on Finsec is a collective investment scheme licensed by the Securities and Exchange Commission of Zimbabwe (SecZim) on March 8, 2023.

The fund was created to fund post-harvest agriculture activities in Zimbabwe, including the provision of liquidity on the Zimbabwe Mercantile Exchange (ZMX).

According to SCF, the listing will enable the seamless trading of agricultural produce through the aggregation of small parcels of produce from various farmers across the country.

The agricultural produce will be aggregated into bigger parcels for agro-processors and other users of agricultural produce as manufacturing inputs.

Status Capital Partners’ SCF will provide a price discovery mechanism on the agricultural exchange, ZMX, allowing farmers to get fair pricing for their produce and processors to get closer to import parity prices.

It seeks to raise US$50 million.

The funds will be raised through the issuance of 50 million units of the fund at US$1 each.

Stratus Capital Partners Commodity Fund will initially invest 70 percent of its investable assets in physical agricultural commodities while 20 percent in quasi-debt instruments and 10 percent into the money market for the purposes of liquidity.

Stratus Capital Partners chief operating officer John Bere said although the figure looked ambitious, it was a small fraction of the US$900 million required by Zimbabwe per year for post-harvest financing.

“The listing of Zimbabwe’s first commodity fund on Finsec presents a significant opportunity for the agriculture industry and the economy.

“It presents future expansion and investment in agriculture, as it has the potential to attract more investors and increase the impact of the industry on the economy.

“In the primary commodity market, as a participant in the Zimbabwe Mercantile Exchange (ZMX), the commodity exchange will be buying and selling agricultural commodities listed on the ZMX.

“In the secondary financial markets, the SCF will be listed on the Financial Securities Exchange (FINSEC) as a mutual fund in the alternative investment space. Investors in the commodity fund can then buy and sell units in the fund through licensed dealers and other authorised financial securities traders,” said Mr John Bere.

He said the collective investment scheme also provided an opportunity for pension funds and other institutional investors to participate in the agricultural sector through investing in the fund.

Lands, Agriculture, Fisheries, Water and Rural Development Permanent Secretary John Basera said the move by SCF fell in line with the Government’s policy of transforming the agricultural sector by creating an enabling environment for private sector participation.

“National Development Strategy 1 (NDS) formulated by the second republic recognised and addressed the need to reform the financing and marketing of agricultural commodities as a stimulant to the economic development of our country.

“Across the world, commodity funds play a vital role in enhancing commodities markets efficiency. It is pleasing to note that our country has taken one bigger step towards international best practice by the establishment of this Commodity Fund,” said Mr Basera.-herald