The recent announcement of migration of African Sun Limited to the VFEX highlights the growing trend of local businesses shifting away from the ZSE and towards the more favourable investment environment provided by the VFEX.
- With its flexible exchange rate controls, lower trading fees, and ability to raise capital in hard currency, the VFEX offers a unique opportunity for businesses to enhance their marketability and market capitalisation.
- As more companies make the switch, the VFEX is likely to become the preferred choice for local businesses looking to raise capital and grow their operations.
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Hospitality Group, African Sun Limited, has recently made the decision to migrate to the Victoria Falls Stock Exchange (VFEX), following a number of local business entities who have also made the switch from the Zimbabwe Stock Exchange (ZSE). This move has sparked discussions regarding the reasons behind the shift and the benefits of listing on the VFEX.
The VFEX is a subsidiary of the ZSE and was launched in 2020, with the aim of operating in the Victoria Falls special economic zone. This unique position enables investors to operate without exchange control risks, using the US dollar as a currency. This has led to a significant increase in interest from local businesses, who have been attracted by the flexible exchange rate controls, lower trading fees, and the ability to raise capital in hard currency.
African Sun Limited, a hospitality management company, announced its migration in a recent advisory to its shareholders. The advisory stated that the board had approved the delisting from the Zimbabwe Stock Exchange, followed by its immediate listing on the VFEX. The company also advised shareholders to exercise caution and consult their professional advisers when trading in the company’s shares, as the details of the transaction will only be provided once all regulatory processes have been finalised.
“The Directors of African Sun Limited (the Company) wish to advise shareholders and the investing public that the Board has approved the delisting of the Company from the Zimbabwe Stock Exchange, immediately followed by its listing on the Victoria Falls Stock Exchange (the Transaction).
“Further details of the transaction will be provided to shareholders once all regulatory processes have been finalised.
“Shareholders are therefore advised to exercise caution and consult their professional advisers when trading in the company’s shares,” said the group.
More companies leave for VFEX
African Sun Limited is involved in the running of several hotels, resorts, casinos, and timeshare operations in Zimbabwe and South Africa, including the Holiday Inn Harare, Holiday Inn Bulawayo, Holiday Inn Mutare, Monomotapa, Elephant Hills Resort, Carribbea Bay Resort, Great Zimbabwe Hotel, Troutbeck Resort, and the Hwange Safari Lodge.
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The recent migration of African Sun Limited to the VFEX is not an isolated occurrence, with several other companies having also made the switch. This includes Simbisa Brands, crocodile breeder Padenga Holding, National Foods Holdings Limited, Seed Co, and Bindura Nickel Corporation.
Economists have pointed out that the VFEX provides a more favourable investment environment, with its flexible exchange rate controls, lower trading fees, and ability to raise capital in hard currency. This has enhanced the marketability and market capitalisation of businesses, making the VFEX an increasingly attractive option for local businesses.
Zimbabwe Stock Exchange (ZSE) chief executive officer Justin Bgoni says the recent wave of exits from the main bourse is not an indicator that firms are dumping the ZSE, but that companies are looking to raise capital.
“So some companies are looking to raise money and that is the reason why they are going to the Victoria Falls Stock Exchange,” ZSE Bgoni told Standard Business. This was before Innscor Africa Limited announced that it was delisting from the ZSE as it sought to raise US$56 million in capex for its current financial year ending June 30, 2023.
“We are in constant talks with government in terms of changing some of the tax incentives — you know tax penalties that are making the ZSE very unattractive — and we think we are making progress.
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“We don’t want to say too much but there are signs that we are making progress.”
“The government’s increase in the retention ratio for exporters listed on the VFEX to 100% will enhance Innscor Africa’s ability to settle its foreign currency liabilities and preserve value in an inflationary environment,” Innscor Africa chairman Addington Chinake said.
Attracting investors
The Victoria Falls Stock Exchange has continued to evolve and enhance its trading platform, offering investors a variety of options for accessing the exchange. One of the most notable additions is VFEX Direct, a new trading platform that provides investors with direct access to the exchange. This platform allows for fast, secure and cost-effective trading, making it an attractive option for both retail and institutional investors.
Another key offering of the VFEX is the introduction of broker controlled accounts. This allows for investors to work with a broker to manage their investments, providing a level of professional expertise and guidance to help ensure that their investments are successful. The broker controlled accounts also offer a level of security, helping to ensure that the funds are protected and managed in the best possible way.
Meanwhile, retail and distribution group Axia Corporation Limited shareholders have also approved the delisting of the company from the Zimbabwe Stock Exchange (ZSE) and the subsequent listing on the forex-denominated VFEX.
In a notice to shareholders, the company revealed that three resolutions were passed for the company to delist from ZSE and list VFEX at an extraordinary meeting held last week.
“Shareholders are advised that all resolutions put to the vote at the extraordinary general meeting of shareholders of Axia Corporation Limited held on Thursday 2 February 2023 were passed,” the notice revealed.
The resolutions that were passed are the delisting of Axia Corporation Limited from the ZSE, listing of Axia Corporation Limited on the VFEX and the authorisation of directors to effect the resolutions.
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The company said the reasons for the latest move include access to US dollar capital to assist in its capital expenditure, working capital requirements and regional expansion initiatives, free repatriation of dividends and proceeds from the disposal of shares through offshore settlement for foreign shareholders, favourable tax incentives for investors of zero capital gains tax and a 5 per cent withholding tax for foreign investors to enhance shareholder returns as well as lower trading costs of 2,12 per cent compared to 4,63 per cent on the ZSE, which would enable Axia to make savings and retain more value for shareholders.
