African Sun sets date for VFEX listing

Enacy Mapakame-Business Reporter

Hospitality group, African Sun Limited, has set April 14, 2023 as the date for the expected completion of its listing on the Victoria Falls Stock Exchange (VFEX), as it moves closer to its migration.

This will be preceded by the termination of the firm’s listing on the main bourse, the Zimbabwe Stock Exchange (ZSE) on April 2, 2023.  Its shares will last trade on ZSE on March 31.

The group will, however, seek shareholder approval for the transaction at an extraordinary general meeting (EGM) to be held on March 28.

African Sun joins a trail of other counters that have migrated to the VFEX, on the back of its attractiveness and ability to increase the visibility of a company listed on it, which can help attract new customers, suppliers and partners.

Since its launch, Axia, Bindura, Innscor, NatFoods, Padenga, Seed Co International and Simbisa have migrated from ZSE to the foreign currency-denominated exchange.

According to African Sun, its migration from the ZSE to the VFEX potentially improves its regional profile and commercial standing, strengthening the company’s prospects for both local and regional expansion.

Being a US dollar-denominated exchange, the VFEX affords businesses to raise capital in foreign currency, at a time the country is still battling forex shortages.

“African Sun’s capital expenditure and future growth and expansion can be better supported by foreign currency capital and a widened investor base,” said the hospitality group in a circular to shareholders.

Among other incentives, the VFEX provides extended options for capital raising including debt listing in foreign currency in addition to lower trading costs of 2,12 percent compared to 4,63 percent on the ZSE, which allows shareholders to retain more value.

“Liquidity of the African Sun shares can be stimulated by lower trading costs of the VFEX compared to the ZSE as well as increased demand for the investment based on its ability to return foreign currency dividends.

“The VFEX allows foreign Shareholders to repatriate their dividends and proceeds from share disposals without restrictions,” said African Sun.

The VFEX also offers tax incentives for shareholders, which include a 5 percent withholding tax on dividends and no capital gains tax on share disposal, thus providing enhanced earnings for shareholders compared to the ZSE.

Additionally, trading on the VFEX provides a hedge against inflation and currency volatility, which has been one of the challenges and allows businesses to have actual valuations of their investments.

Said African Sun: “The provision of a de facto third-party USD valuation of the company enables African Sun’s existing Shareholders to realise the actual value of their investment and to provide a more accurate benchmark of the stock’s performance while mitigating valuation volatility.”

African Sun and its subsidiaries is a hospitality group involved in running hotels, resorts, and timeshare operations in Zimbabwe. The group is currently organised into five divisions – City and Country Hotels, Resort Hotels, The Victoria Falls Hotel Partnership, Sun Leisure and Real Estate.

Its hospitality portfolio includes The Victoria Falls Hotel (operated in partnership with Meikles Hospitality, Elephant Hills Resort and Conference Centre, Caribbea Bay Resort, Great Zimbabwe Hotel, Hwange Safari Lodge, Holiday Inn Harare, Holiday Inn Bulawayo, Holiday Inn Mutare, Troutbeck Resort, Monomotapa Hotel, and Sun Leisure Tours.