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Nqobile Bhebhe, Senior Business Reporter

SIMBISA Brands Limited says listing on the foreign currency-denominated Victoria Falls Stock Exchange (VFEX) will place it at an competitive advantage to attract capital injection from foreign investors to match the business’ foreign currency needs.
Simbisa’s revenue streams are predominantly in US dollars and local dollar for the Zimbabwean operations, which are critical to the group’s viability.

Brands under its wings include Nando’s, Steers, Haefelis, Baker’s Inn, Pizza Inn, Creamy Inn and Chicken Inn.
In September, the quick service restaurant provider announced its intention to delist from the Zimbabwe Stock Exchange and immediately list on VFEX.

The initial cautionary statement to shareholders dated September 27, gave no reasons for delisting and dates for listing on VFEX.

However, an update to shareholders this week spells out the reasons and time lines for trading on VFEX.

Outlining to shareholders the listing timeframe, the firm said the move will attract foreign currency capital from investors and the USD indexed exchange would support the organisation’s most appropriate functional currency and its sizeable ownership in foreign assets.

“Simbisa will be better positioned to raise capital in foreign currency from a broader potential market to align with its strategy to expand its footprint in international markets,” reads part of the update.

In its latest financial report, the group outlined plans to invest US$23 million in opening 87 new stores in the 2023 financial year in Zimbabwe and Kenya.

Of the 87, the restaurants operator is eyeing 45 outlets in Zimbabwe and 30 in Kenya, the firm said in its latest annual financials for year ending 30 June.

The company further said VFEX has lower trading costs compared to the ZSE.
“The VFEX’s lower trading costs of 2.12 percent compared to 4.63 percent on the ZSE will improve the shares’ liquidity,” said the firm.

It added that repatriation of dividends are much easier through an allowance for offshore settlements.
“Capital raised through a VFEX listing may be held in an approved local or offshore account, and there would be an allowance for offshore settlements for executed trades for easier repatriation of dividends and more transactional flexibility to existing shareholders,” it said.

“This would attract a more diverse shareholder base and enable Simbisa’s shareholders to realise the value of their holdings’ incentivising greater liquidity.”

With the tax incentives available for Simbisa shareholders, the brand is well positioned to enhance its international appeal and this is another motivation for opting to list with VFEX, the firm noted.

“The VFEX offers tax incentives for shareholders, which include a five percent withholding tax on dividends and no capital gains tax on share disposal. Shareholders would be able to retain more of their earnings compared to the ZSE,” it said.

“The VFEX would elevate Simbisa’s local and international profile, which would in turn boost the company’s commercial standing. This would boost the company’s ability to raise capital from foreign investors.”

The firm is expected to hold its annual general meeting on 18 November followed by delisiting at ZSE on 28 November and transfer its share register from the ZSE to the VFEX on December 1.

Estimated completion of Simbisa’s VFEX listing is planned for December 2.

The USD-denominated VFEX is a subsidiary of the ZSE launched in 2020 as an off-shore biased financial services centre as 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.

Its setting is largely expected to go a long way in buttressing the Victoria Falls Special Economic Zone.

At its inception VFEX began trading with leading seed producer and distributor, SeedCo International Limited with mining giant Caledonia Mining, skins and meat processor – Padenga and Bindura Nickel Corporation coming on board later.

GetBucks Bank, which also intends to migrate to VFEX, has said negotiations for recapitalisation and the process to shift to VFEX are still in progress.

Nedbank Zimbabwe has also indicated its intention to list on the fast-growing VFEX next month.