Harare – Tanganda Tea Company Limited is set to review a potential delisting from the Zimbabwe Stock Exchange (ZSE) and consider a move to the United States dollar-denominated Victoria Falls Stock Exchange (VFEX).
The company’s board of directors announced plans to hold discussions aimed at relocating the company’s listing to capitalise on VFEX’s stable currency environment and incentives, reflecting a growing trend among Zimbabwean firms.
Tanganda, which rejoined the ZSE on February 3, 2022, with an initial market capitalisation of US$134.29 million, has faced significant losses attributed to currency volatility and economic shifts. Following the scrapping of the Zimbabwe dollar and the introduction of the Zimbabwe Gold (ZiG) currency in April, Tanganda’s valuation dropped to US$21.67 million as of Monday, marking a loss of approximately US$112.62 million in market value since its ZSE listing.
The VFEX, which operates in US dollars, has emerged as a popular alternative for companies affected by the volatility of local currency, offering a stable trading environment for firms seeking to stabilise share values and attract foreign investment. Tanganda joins other companies, such as BridgeFort Capital Limited, which recently announced its departure from the ZSE in favour of the VFEX.
In a statement to shareholders, Tanganda indicated plans to propose the VFEX migration at an extraordinary general meeting, with an additional proposal for a capital raise of approximately US$7.7 million through a renounceable rights offer.
“The transactions, if successful, may have a material effect on the company’s share price. Accordingly, shareholders are advised to exercise caution when dealing in the company’s shares,” Tanganda cautioned.
The VFEX’s appeal has grown amidst recent performance issues on the ZSE, where despite a nominal market capitalisation increase of 21.68% to ZiG72.75 billion last month, the exchange’s real-term valuation declined by 14.65% to US$2.17 billion, further reflecting currency instability.
Tanganda’s proposed capital raise aligns with its broader strategy to bolster export growth, particularly in avocado, macadamia, and tea products. The company’s third-quarter update to June 30, 2024, cited El Niño-driven drought and evolving fiscal policies as key challenges but expressed optimism that planned efficiency strategies would boost yields and manage costs effectively.
“The demand for our packed tea products remains firm both on the local and regional markets, and we are focused on sustained diversification of the market,” the company stated.
Tanganda’s shift to the VFEX would mark a significant transition as the firm navigates Zimbabwe’s shifting economic landscape, underscoring a corporate trend toward forex stability as companies prioritise operational resilience and shareholder value amidst ongoing currency challenges.
Source: News Day
