Nqobile Bhebhe, Senior Business Reporter
THE Victoria Falls Stock Exchange (VFEX) closes the year 2022 on a higher note with market capitalisation at US$411 million as the bourse continues to attract high-end firms in mining, manufacturing, and financial services.
As of 23 December, VFEX’s market capitalisation was US$411 million.
The rapid growth of VFEX in the last quarter of 2022 has brought excitement to the financial services sector, injecting much-needed confidence and cementing the country as a safe investment destination.
Having kick-started trade with a single counter, Seed Co International in October 2019, the United States-denominated bourse now boasts seven counters.
Interest has grown in leaps and bounds with more firms showing keen interest in coming on board.
President Mnangagwa officially launched the United States dollar-denominated Zimbabwe Stock Exchange (ZSE) subsidiary in December last year where he also presided over the listing of Caledonia Mining Corporation.
The gold mining group issued and invested nearly 620 000 new shares and raised US$8 million. The funds generated were used to make investments into Blanket’s capital expenditure for offshore supplier payments for certain pieces of equipment, and to also fund part of the 12MW solar plant project.
In his address, President Mnangagwa said VFEX was expected to drive domestic and international investments, which are a key requirement for the attainment of our vision of a prosperous and empowered upper-middle-income economy by 2030.
At the time of the official launch, the US dollar exchange had just three listings since it was established in the previous year.
Seed Co International was the first listing in October of 2020, the same month Finance and Economic Development Minister, Professor Mthuli Ncube, launched the stock exchange.
Nine months later, Padenga Holdings Limited, the leading crocodile skins, and meat processor followed. Prof Ncube said for VFEX to have achieved two listings in nine months is commendable.
“Those who are familiar with capital markets will understand that ordinarily a new listing takes time, typically anything from six to 18 months or even longer, and for VFEX to have achieved two listings in nine months is certainly commendable,” said Prof Ncube at that time.
Skeptics had been quick to claim the bourse would suffer a stillbirth citing a lack of perceived investor confidence by-in. However, fast track to December 2022, seven firms are now trading while several more are joining the queue.
The bourse now boasts of hosting mining giant Caledonia Mining, Bindura Nickel Corporation, Simbisa Brands and Nedbank Zimbabwe, which became the first financial institution to trade.
Platinum miner Karo Mining Holdings, listed about two weeks ago, becoming the seventh counter.
The mining group garnered an oversubscribed bond issue of US$31,8 million worth of interest generated, exceeding the minimum requirement of US$25 million.
National Foods Holdings Limited, has decided to migrate to VFEX, a move the firm says will improve its capitalisation and enhance its marketability.
Financial services group GetBucks has also indicated plans to migrate to the VFEX from the ZSE.
The exchange has the potential to become a game changer in a country endowed with vast mineral resources as it trades in hard currency and therefore a good funding mechanism for the mining sector, which is seen as an enabler for economic growth.
The 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.
Prof Ncube has encouraged more businesses, local and international, to list on the VFEX.
“The key word is vibrancy and for the capital market to be vibrant it needs more issuers who in turn will attract investors,” he said.
“As your Minister of Finance and Economic Development, let me make this call — we need more listings on the VFEX and I urge all the unlisted corporates in the mining, manufacturing, agriculture, and other sectors of our economy to consider listing.”
The investor momentum generated in the last quarter is expected to spill over to next year and result in an influx of listings.