Run of de-listings on Zim Stock Exchange

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Harare - One of Zimbabwe’s largest electrical goods dealers, Powerspeed, has started the process of de-listing from the local bourse after 22 years.

Six companies have already exited - or are in the process of exiting - the Zimbabwe Stock Exchange this year, making this one of the toughest years on Harare’s main capital market. The government temporarily closed the ZSE in June to halt an inflationary surge.

Powerspeed this week said maintaining a listing on the ZSE was no longer viable because shares were trading at a huge discount due to liquidity challenges in Zimbabwe.

A formal proposal by the Powerspeed board to de-list will be put to a shareholder vote at an extraordinary general meeting in coming weeks.

“The board of directors of Powerspeed are of the view that in the current environment in Zimbabwe, a listing on the Zimbabwe Stock Exchange has very little benefit and considerable costs,” Powerspeed directors said.

“Powerspeed is a very illiquid stock and trading often does not represent a realistic valuation. The lack of capital from institutional investors means that the listing has limited value in terms of a mechanism to raise capital and ongoing legal, compliance and audit costs are an impediment to shareholder returns.

“In the face of a difficult trading environment the additional costs of being listed, with no compensating benefits, can no longer be borne by the company. Powerspeed has decided to propose to shareholders its delisting from the ZSE. The ZSE has directed that Powerspeed provide a mechanism to shareholders wishing to exit their shareholding prior to the delisting, which mechanism is detailed in the offer,” the circular from the company said.

Miner Falcon Gold left the ZSE citing low trading. ZimRe Property Investments and SeedCo International also delisted; while Dawn Properties is on its way out.

SeedCo International was one of three fungible counters – the others being Old Mutual and PPC - affected by a government directive to de-list in June 2020.

It has since listed on the new Victoria Falls Stock Exchange (VFEX), which offers trading in US dollars.

Researchers at Morgan&Co warned the ZSE could be “cannibalised” by the VFEX.

“Is there any strategic logic for an issuer to list on the ZSE only to raise capital in Zim dollars?” Morgan&Co queried in its Economics and Market Intelligent Report of October 7, 2020.

“We are witnessing a wave of voluntary de-listings from the ZSE for various reasons. Falgold has scheduled an extraordinary general meeting where it will seek shareholder approval to terminate its ZSE listing. Boundary Investments, a wholly owned subsidiary of New Dawn Mining Corp will make a cash offer of 13c per share to minority shareholders.

Dawn Properties is also set to delist from the bourse after African Sun Limited made an offer to acquire 100 percent shares in the company in a deal that will see it assume ownership of the firm’s key assets,” said Morgan&Co.

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