Zimbabwe’s diversified financial services group, Old Mutual and cement maker, PPC Limited, are in discussion with the government over sticking issues as the counters eye a listing on the Victoria Falls Stock Exchange (VFEX), the local bourse’s CEO has revealed.
Last year, the government suspended trading in three dual-listed counters—Old Mutual, PPC Limited and Seed Co arguing that their stocks had become vehicles for repatriating investment out of the country, fuelling currency distortions and a spike in exchange rate.
It decreed that the counters have to delist from ZSE and join the VFEX.
Seed Co International is now listed on VFEX after delisting from the ZSE. Its fungibility was also restored.
But, the ban on Old Mutual and PPC Limited was further extended by 12 months to March next year.
The duo was expected to list on the VFEX.
But, this has not happened.
“PPC and Old Mutual are discussing privately with the government on the suspension matter,” ZSE chief executive officer Justin Bgoni told Business Times.
Old Mutual is also listed on the Johannesburg Stock Exchange and London Stock Exchange while PPC is present on the JSE.
However, the Insurance and Pensions Commission (IPEC) said it was critical to have a quick resolution to the Old Mutual and PPC matter.
IPEC highlighted that the continued suspension of Old Mutual and PPC needed a quick resolution as several local pension funds have their money tied up in the two counters.
Market watchers believed that the reluctance by the two companies to list on VFEX signals a lack of confidence in the new stock market.
The US$ denominated stock exchange, created out of the need to attract international capital and hard currency funding for local entities, has been struggling to attract new listings since its launch in October last year.
This has been attributed to the policy inconsistency and a trust deficit and dividend remittance bottlenecks, among other problems.
Apart from that Zimbabwe has been regarded as a high-risk country to invest in due to its unpredicted legal system and policy inconsistencies.
According to Exchange Control directive RV177/2020 issued by the Reserve Bank of Zimbabwe, all foreign currency inflows invested into a resident company listed on the VFEX shall be from free funds or offshore funds and these investment funds shall be credited to the listed corporate’s investments foreign currency account.
The central bank also said that the funds held in the investments FCA shall not be subject to any surrender requirements and shall be held for an indefinite period for use by the listed company.
The directive also states that exchange control approval will be required from resident companies listed on the VFEX, for opening an offshore account for the purposes of receiving investment proceeds.
Non-resident companies listed on the VFEX will receive investment funds in local or offshore investment accounts.
The non-resident company can keep funds raised from the listing or the balance after investing the required amounts in Zimbabwe.
Foreign currency received by resident investors on the VFEX as disinvestment proceeds and dividends into their local FCA accounts, shall be eligible for meeting offshore payments as well as settling local obligations.
Dividend or disinvestment proceeds due to non-resident investors shall be freely remittable through the authorised dealer without seeking prior exchange control approval.
Government this week offered more incentives to encourage listings on VFEX. Exporters listed on the bourse would retain 100% on incremental export proceeds. Before the review, exporters on the bourse were entitled to retain 60% of the proceeds. – Business Times