More ZSE delistings loom

HARARE – More delistings loom on the Zimbabwe Stock Exchange (ZSE) this year on the back of slackening economic growth and depressed financial performance.This comes as a record 12 companies have departed from the local bourse over the past five years.Several listed entities are voluntarily leaving the ZSE, saying they are not realising value while others are saying new investors are increasing their individual shareholding beyond the bourse’s prescribed threshold.

According to ZSE’s listing rules, an entity that acquires more than 35 percent of a listed company is required to buy out minority shareholders at the current trading price and subsequently delist from the bourse or reduce shareholding to prescribed level.

Hospitality concern African Sun Limited (ASL) may delist from the local bourse after private equity group Brainworks Capital (Brainworks) – through its subsidiary Lengrah Investments — increased its shareholding in ASL from 32 percent to 45 percent following a special bargain of 42,3 million shares.

Market analysts believe that Brainworks, through its anchor shareholder African Development Corporation, intends to list either on the Frankfurt Stock Exchange or the Toronto Stock Exchange. The recent acquisition of ABC Holdings (ABCH) — parent company to pan-African banking unit BancABC — by London Stock Exchange-listed Atlas Mara Co-Nvest Limited (Atlas Mara) has sent tongues wagging on the sub-Saharan financial markets.

Founded by former Barclays Plc boss Bob Diamond and Africa’s youngest billionaire Ashish Thakkar — Atlas Mara is set to acquire the remaining 4,2 percent of ABCH to conclude takeover of the financial group.

This follows the completion of take-over of a 95,8 percent stake in ABCH.

After the offer, which will see Atlas Mara owning 100 percent of ABCH, the latter would consequently delist from both the Botswana and Zimbabwe stock exchanges.

If plans by diversified concern Art Corporation (Art) to recapitalise following shareholders approval of a resolution to double the company’s borrowing limit to $20 million sail through, it will in the short run force out the firm to delist from the ZSE in order to whet its appetite for more funding.

This comes as South Korea based Taesung, now the single largest shareholder in Art, acquired a 33,86 percent shareholding in the company through two wholly-owned vehicles — Cranbal Investments Pvt Ltd and Silvermine Investments.

Persistent liquidity constraints in the economy as well as competition from imports have significantly constrained Art’s ability to generate revenues to planned levels.

Prospects of Art delisting from the ZSE are quite evident as an option to turn debt into equity opens up.

On another note, insurance group Zimre Holdings Limited (ZHL) is also considering delisting from the equities market, as it remains depressed and is offering no shareholder value.

Albert Nduna, the group’s chief executive, last week said stocks are undervalued while it is increasingly difficult to raise capital on the 65-counter bourse.

“The valuation of shares on the ZSE worries shareholders and managers to the extent that some are advocating delisting. The stock exchange is there to raise capital and if you cannot do that, then it worries shareholders,” Nduna said, adding that “we are interrogating it (the delisting plan)”.

Only last week, Interfin Financial Services was struck off the bourse’s register.

According to a report in the latest 2014 Central African Stock Exchange (Case) handbook, the equities market faces more delistings.

“…it is possible that at least two other companies will delist this year,” the report said.

In April, agro-focused firm Chemco delisted after having applied for voluntary suspension in 2012.

Apex Corporation, one of the oldest counters on the bourse, was struck off the ZSE’s register in July last year after applying for voluntary suspension a month earlier while it was under judicial management. In December last year, horticultural concern Interfresh delisted following its shareholders’ approval to voluntarily leave the bourse. The group argued that its shares had consistently traded at a discount to net asset value and raising capital at the current valuation on the ZSE had “proved rather limiting”.

The Case report noted that Tawanda Nyambirai’s Lifestyle Holdings delisted on June 10 last year, having been suspended from trading in April the same year.

The furniture manufacturing company has since been experiencing rapid down-sizing over the past year and has closed 12 branches while retrenching an unspecified number of its 1 420 employees.

Financial group Trust Holdings voluntarily delisted in November while the High Court has set aside its liquidation order following its closure in December last year.

Food processor Cairns Holdings (Cairns) also left the bourse after a suspension while Gulliver Consolidated delisted in June 2013 for failing to produce financial statements within the required period.

In June last year, ZSE opted to delist Steelnet after the High Court granted a final liquidation on May 8.

In 2012, Celsys opted for voluntary suspension in August, pending the proposed listing of Cambria.

A report by equities research firm Lynton Edwards Stockbrokers (Les) revealed that the recently published financial results of the Zimbabwe Stock Exchange-listed companies reflect a deteriorating economy, characterised by a prevailing liquidity crunch, which has severely affected disposable incomes.