HARARE – National Foods, Zimbabwe’s largest food producer, has announced its decision to delist from the Victoria Falls Stock Exchange (VFEX), citing a lack of need for capital from the market and liquidity challenges that have plagued the exchange.
The VFEX, launched in 2020 to attract companies with the promise of raising US dollars for expansion, has struggled with low trading volumes. National Foods, the maker of popular brands like Gloria, Red Seal, Pearlenta, and BetterBuy, is now going private and plans to buy out its remaining shareholders.
In a statement quoted by NewZwire, National Foods said: “The company no longer requires capital from public equity markets in the near term, reducing the advantages of maintaining a VFEX listing. The delisting will enable National Foods to redirect spending on substantial regulatory and compliance expenses to initiatives that are more closely aligned with the company’s needs.”
Restructuring for Operational Flexibility
The company, 75% owned by Innscor and South Africa’s Tiger Brands, said its ownership structure and the limited participation of smaller retail investors have further diminished the benefits of remaining listed.
“Given the low liquidity and restricted trading environment that have historically impacted both the VFEX and previously the ZSE, alongside the concentrated ownership structure, maintaining a listing offers little benefit,” the company said.
National Foods highlighted that delisting would provide greater operational flexibility, allowing it to focus on long-term strategic goals without the pressures of public market requirements.
Expansions Funded Outside Public Markets
Innscor and Tiger Brands each hold a 37.45% stake in National Foods. Over the past three years, Innscor has invested more than US$160 million in expansion, much of it directed toward National Foods. Key projects include:
- A US$22 million bread factory in Bulawayo.
- A US$32 million investment in growth projects, such as a new flour mill in Bulawayo, pasta and biscuit lines in Harare, and the launch of NutriActive, a breakfast cereal range.
These expansions have been funded through profits and borrowings rather than public equity markets.
Challenges for VFEX
The VFEX has faced criticism for its low liquidity, which limits the ability of companies to attract significant capital. National Foods’ exit highlights broader challenges for the exchange as companies reassess the value of public listings.
By going private, National Foods aims to cut costs associated with compliance and regulatory requirements while focusing resources on operations and growth initiatives.
The delisting follows a broader restructuring within Tiger Brands, which is reassessing its operations in South Africa and may look to offload assets in the future.
National Foods’ departure raises questions about the long-term viability of VFEX and its ability to deliver on its promise of providing an efficient platform for raising capital in foreign currency.