Delistings, cash calls dominate 2023

Bellwether stock, Innscor Africa Limited, delisted from the ZSE in February as it migrated to the VFEX.
Six companies delisted from the Zimbabwe Stock Exchange (ZSE) while four approached shareholders for additional resources as the curtains come down on 2023 in three days’ time.

VFEX’s pulling power

When the Victoria Falls Stock Exchange (VFEX) debuted in 2020, there were concerns that its incentives would see listed companies abandoning ZSE in favour of the dollar-only bourse.

Those fears were confirmed this year as five companies trekked, lured by favourable tax incentives for investors enabling the optimisation of returns.

The incentives include zero capital gains tax on VFEX resident and non-resident investors and a 5% dividend withholding tax for foreign investors.

Bellwether stock, Innscor Africa Limited, delisted from the ZSE in February as it migrated to the VFEX. At the time of its delisting, Innscor was a Top 10 constituent and the second largest listed counter by market capitalisation behind beverages manufacturer Delta.

Consumer discretionary concern Axia Corporation delisted from the bourse on February 28 and migrated to the foreign currency only exchange, lured by incentives rolled out by the bourse.

Hospitality group African Sun and First Capital Bank delisted from the ZSE in April and May, respectively.

Zimplow ended its 72-year flirtation with the ZSE, listing on the VFEX in July, saying it would raise capital to be deployed in its units as the group seeks to lure original equipment manufacturers.

GetBucks delisted from the bourse with effect from September 18. Before the delisting, the microfinancier had been struggling after the central bank hiked the bank policy rate to 200% per annum as part of measures to contain galloping inflation.

Cash calls

The year also saw companies turning to shareholders for support by offering them new shares as they sought to confront an extraordinary situation in their midst.

In August, clothing manufacturer and retailer Truworths raised ZWL$2,227 billion from existing shareholders to increase working capital funding at a sustainable cost considering the high interest rate environment, reduce borrowings, open new format Truworths Chain stores and improve the product assortment.

The subscription rate was 90,1%.

In September, Econet Wireless Zimbabwe raised US$30,3 million from existing shareholders to redeem its portion of the amount that is due to debenture holders in terms of the debenture trust deed that was executed by the company and the debenture trustees six years ago.

The underwriter, TN Asset Management, picked up 43,39% of the rights offer shares that were not subscribed for. This gave the asset manager a 5,82% stake in the firm.

Also, in September EcoCash Holdings Limited raised US$30,3 million to redeem its portion of the amount that is due to debenture holders in terms of the debenture trust deed that was executed by the company and the Debenture Trustees six years ago.

The underwriter was left with 64,54% of the rights offer shares. This left TN Asset Management with a 24,68% shareholding in the company.

Building materials concern Turnall also approached shareholders to raise ZWL$47 824 909 876 (equivalent to US$8 million) to install fibre cement building products production capacity in the Harare factory and a plant to produce glass reinforced pipes (GRP) in Harare to address the shift in the pipes demand away from asbestos based products and the growing demand for GRP pipes.

The cash call raised ZWL$36 947 466 150,23 which was equivalent to US$8 million at the time after a strengthening of the local currency and there was no need for the underwriter (Zimbabwean Brands) to subscribe for any shares in the company and no underwriting fee was paid.

Another REIT on ZSE

Another real estate investment trust (REIT) Revitus listed on the Zimbabwe Stock Exchange this month, targeting a profit of US$3,2 million over the next five years.

The fund, promoted by the NRZ Pension Fund, had its initial public offering 18,27% subscribed showing low appetite in the REIT.

Revitus becomes the second REIT to be listed on the ZSE after Tigere made its debut last year. There are five more licensed REITS on the way.

Experts say REITs by pension funds would aid in motivating others who were over-exposed to the real estate asset class to use those properties to access liquidity from the capital markets.

Combined forces

In July, ZSE and other stakeholders came together to establish a REIT association to promote the growth of the REIT market, to educate investors about REITs and to advocate the interests of REITs with regulators and policymakers. The association is chaired by Integrated Properties CEO Mike Juru.

Cracking the whip

In June, ZSE suspended EFE Securities and its three securities dealers Edgeton Tsanga, Brenda Mwaturura, and Coreen Madanha for six weeks for conduct that is “detrimental to the integrity of the market”.

The quartet was fined, and the suspension was lifted in August.

Circuit breaker changes

In August ZSE changed the circuit breakers on securities with a market price of Zimbabwe dollar equivalent of US0,01c to +/-100% from +/-20%.

The changes came after the market had trading halts in May and June after the All-Share index breached the 10% threshold on the upside.

Reprieve

ZSE has given listed firms a reprieve after removing a requirement that they submit audited interim financial results.

This came after companies besieged the regulator for extensions following delays by auditors.

Behold, a mega institution in the making

Early this month, CBZ Holdings appointed business executive Luxon Zembe as the acting board chairperson to lead the financial services group’s merger with ZB Financial Holdings Limited.

Zembe takes over from Marc Holtzman who had been board chairperson since September 2019.

The appointment of Zembe as CBZ acting chairperson comes three months after he was appointed ZB Financial Holdings board chairperson.

CBZ Holdings has FMHL in the bag after completing the acquisition of a 31,22% stake in September.

The acquisition took its shareholding to 36,22% in FMHL, as it sought to strengthen its balance sheet through mergers and acquisitions.

The first casualty of the pending merger was group CEO Blessing Mudavanhu, who is leaving at the end of the month after five years at the helm. He has been replaced by Lawrence Nyazema who is holding the fort in an acting capacity.

Here to stay?

In June, FBC Holdings won the bid to acquire Standard Chartered Plc’s Zimbabwean unit more than a year after the multinational banking group said it was exiting seven markets including Zimbabwe.

FBC acquired 100% of the shareholding in Standard Chartered Bank (Zimbabwe) Limited and by extension, the custodial services business that is wholly owned by Standard Chartered Bank Zimbabwe.

As part of the agreement, FBC also acquired the economic interest in Africa Enterprise Network Trust whose main asset is a 20,7% shareholding in Mashonaland Holdings.

The transaction was approved by the central bank last month. The exit of Standard Chartered Plc from the local banking sector came despite insistence by the multinational banking group that it was here to stay.

Adios John

John Mushayavanhu has been associated with FBC Holdings since joining the then First Banking Corporation in 1997, rising to group CEO in 2011.

The veteran banker is leaving the group at the end of the month after his appointment as Zimbabwe’s central bank governor with effect from May 1, 2024.

He will be replaced by another FBC veteran Trynos Kufazvinei who takes over the reins on January 1.-newsday