Quick service restaurant (QSR) group, Simbisa Brands Limited’s plans for a secondary listing on the London Stock Exchange have been put on hold as the market is currently not conducive for the transaction.
The company will now focus on growing its business before implementation of the listing, chairman Addington Chinake said.
In July last year, Simbisa announced its intention for a secondary listing of its ordinary share capital on the London Stock Exchange AIM as part of its expansion programme.
The listing, whose implementation was scheduled for this year, is expected to create access to equity financing from international markets and a wider pool of funding including competitively priced debt funding.
However, indications are that investor feedback was not favourable for the transaction to proceed, and the roll out plan was not palatable enough for the group to accomplish what they intended to achieve for investors.
Mr Chinake said the group had not put enough liquidity into the deal and would now focus on growing its business as it readies for implementation in the near future.
“The market conditions are not very suitable. But shareholders will be notified on the update. The board is meeting and this is one of the issues to be looked at,” he said.
Indications are that the group was looking at a $30 million investment deal, which was not enough for the fund managers in London who preferred a portfolio of $100 million.
Allowing the transaction to proceed would therefore be tantamount to ceding the company to London investors, who would have invested the remaining amount.
Since it was spun off from parent company — Innscor — in November 2015, Simbisa has been on a growth trajectory, expanding into regional and international markets as well as adding more counters both in Zimbabwe and across the region where it has a presence.
Meanwhile Simbisa’s performance for the first quarter of financial year 2019 is ahead of prior year period and targets.
Group chief executive officer Basil Dionisio told shareholders that although the macro-economic environment was challenging due to foreign currency shortages and the recently introduced two percent tax, the company was on track to achieve a strong set of results for the half year.
The 2 percent tax increased the cost of doing business which had an effect on price.
“Despite the persistent challenges in the trading environment, I am pleased to say the group has achieved strong set of results in the first quarter of 2019 financial year and performance has exceeded expectations,” he said.
Year-on-year, Zimbabwe has recorded double digit growth on positive contribution from new counters. The group opened 8 new counters in July to September to close the period to September 30, 2018 with 421 counters.
Although the trading conditions in Zimbabwe have been challenging and expected to remain challenging in the short term, the improved transactional convenience in the market is expected to create room for Simbisa’s future growth.
Zimbabwe is the group’s biggest market.