PLATINUM miner Karo Mining Holdings, which expects to open its mine in 2024, has listed on the Victoria Falls Stock Exchange (VFEX) as the seventh counter and the first to issue bonds since the exchange, which deals in shares denominated in US dollars, opened two years ago.
VFEX is the only exchange in Africa trading in the United States dollars and was established by Government in 2020 to attract global investment by companies that wanted to maintain foreign exchange shareholdings and for Zimbabwean companies largely operating in export markets to retain their headquarters in the country.
Karo’s listing comes a week after fast food group Simbisa Brands Limited, with a rapidly growing regional network and revenue, became the 6th counter, adding to financial services group Nedbank Zimbabwe, giant seed producer and distributor, Seed Co International Limited, another mining giant Caledonia Mining, skins and meat processor Padenga and Bindura Nickel Corporation.
Karo is set to raise funds on the VFEX by means of the first publicly listed USD denominated structured debt instrument, and the listing is critical as Zimbabwe’s bond market has not been active for some time. Karo Mining has not listed on any exchange before although its parent company is traded both on the Johannesburg and London stock exchanges.
Karo issued a US$50 million three-year bond at a semi-annual rate of 9,5 percent.
Finance and Economic Development Deputy Minister Clemence Chiduwa presided over the listing ceremony and ringing of the bell on Friday in Victoria Falls, on behalf of Minister Professor Mthuli Ncube.
Prof Ncube said when Government established the VFEX as a pioneering offshore financial services centre in Zimbabwe, the vision was to create an exchange that could drive the deepening and sophistication of financial systems in order to address modern day challenges of Zimbabwe and within two years had registered tremendous development.
“It is for these reasons that we as Government are particularly excited to see the listing of the first fixed income bond on the VFEX and indeed the largest capital raised to date on the VFEX at US$32 million,” he said.
Prof Ncube said investment into the Karo Mining Holdings bond comprises both local and foreign investors, which is a sign of confidence in Zimbabwe’s economy.
The debt instrument subscription rate is 63 percent and the bulk of the money was raised locally, making the bond listing the first instrument that has raised fresh money from portfolio investments since 2015, according to financial market experts.
Globally, the bond market provides a significant source of capital for every Government, companies, local authority and financial institutions.
It is expected that the listing of Karo will revive the fixed income market and contribute towards development and deepening of capital markets.
VFEX deputy chair Mr Bartholomew Mswaka said: “We are very much excited to welcome the very first debt instrument on our bourse since its inception in October 2020 making Karo Holdings the 7th issuer on the exchange.”
Mr Michael Jones, who was representing Karo Holdings board chair, Mr Phoevos Pouroulis, said the bond listing was the first of its kind in Zimbabwe and had raised over US$30 million so far.
“This is an opportunity for bond market in Zimbabwe and particularly in the growth of the economy. We thank our investors both foreign and local for the confidence in investing in us and we look forward to the start of this bond market development,” he said.
The VFEX is a subsidiary of the Zimbabwe Stock Exchange (ZSE) launched in 2020 as an off-shore biased financial services centre.
It is part of efforts to attract global capital and restore foreign investor confidence in Zimbabwe’s capital markets and help companies raise capital in foreign currency.
VFEX was established as a Special Economic Zone as provided by Statutory Instrument 196 of 2020.
Government has come up with a raft of incentives in order to promote listings on VFEX and this should be complemented by increased productivity and investment.
Investors who participate in the VFEX benefit from the ability to move their capital and dividends in and out freely, low transaction costs, tax incentives that include a five percent dividend withholding tax for foreign investors and exemption from capital gains withholding tax for all investors and minimal currency risks. – Herald
