Archive for the 'Zimbabwe' Category
December 7th, 2010 by Tom Minney
The Zimbabwe Stock Exchange (www.zse.co.zw) snapped up its first new listing since 2007 on 29 November when Padenga Holdings Limited was admitted as the 77th listing. This year there have been 2 listings described as “reverse takeover listings”, TN Financial Holdings Ltd acquired Tedco Limited (January) in order to get listed on the ZSE and Interfin Holdings took over CFX Financial Services (May) and with it CFX Bank.
First day trading in Padenga was reported at 2.7 million shares, of which 1.8 million were book-overs by Imara Asset Management. The highest offer was US$7 cents, but trade opened at US$5c.
Padenga was created in September when diversified manufacturing conglomerate Innscor divested of its crocodile skins division Niloticus operated as a wholly-owned of Innscor, a, which has diluted its shareholding in the company from 100%. Innscor transferred assets and liabilities of its former subsidiary to the new public company in exchange for 541,593,440 of Padenga’s issued ordinary shares. These are to be distributed to Innscor shareholders by way of a dividend in specie, which technically means acquisition by way of share swap in lieu of cash distribution.
It has 3 farms in Kariba and supplies about 33% of the world’s demand for large, high-quality crocodile skins. It earns 92% of its revenue from tannery exports to Asia and Europe and 8% from meat shipments to Asia. Its main clients include leading global brands such as Gucci. Padenga in its prelisting statement (Padenga prelisting statement online, click here) reported that gross turnover up at $11.8 million for the year to 30 June (up from $10.2 million in 2009) and operating profit before depreciation and amortization of $1.3million (up from $69,879). The company is well covered by the excellent www.africanfinancials.com and www.africanir.com.
Padenga CEO Gary Sharp was reported in local media: “I am extremely optimistic about the opportunities that the listing brings us in terms of our intentions to grow the business and pursue related ventures using the experience, skills and IP (intellectual property) we have developed locally.
“We are now producing a size and quality of skin that commands premium prices and this largely separates us from the level of the market that is impacted by global market trends and fluctuating skin prices. We are predicting sustained revenue and profit growth over the foreseeable future and have every confidence in achieving these results.”
The global financial crisis had a negative impact on the international exotic skins market as both demand and prices declined. Subsequently, the company had to de-stock, which resulted in the business incurring a fair value loss during the financial year.
Another rumoured listing could be LonZim Plc, a 24.61% associate company of AIM-listed Lonrho, which announced on 29 November that it has raised £4,987,904 (before expenses), by issuing 17,813,944 new ordinary shares of £0.0001 each at 28p per LonZim share. This was principally conducted amongst new and existing institutional shareholders in LonZim. Lonrho participated to maintain its percentage shareholding of 24.61% by subscribing for 4,384,011 new LonZim Shares at a cost of £1,227,523. It is reported to be aiming to raise a further US$5 million for capital expenditure through a rights issue, with all funds to go to expanding existing operations.
On 2 November it was reported that Whetstone Minerals, listed on Canada’s Toronto Stock Exchange and concentrating on gold mining in Zimbabwe, was seeking a secondary listing for its shares on the ZSE, and this is reported still to be coming this year.
ZSE CEO Emmanuel Munyukwi was reported as saying also that Kingdom Financial Holdings would be one of 3 new listings (including Padenga) before the end of the year. He said several foreign companies had inquired about listing on the bourse.
October 26th, 2010 by Tom Minney
Lontoh Coal (www.lontohcoal.com), a South African unlisted mining company with projects in Zimbabwe, wants to do its next public offer in Hong Kong, according to a Reuters report on a South China Morning Post story. The initial public offer (IPO) aims to raise up to $500 million.
According to the report Lontoh chief executive Tshebo Kgadima said he had chosen to list in Hong Kong as it might have been difficult for his company to sell shares in New York or London as the United States forbids trade or investment with Zimbabwean firms linked to the country’s president Robert Mugabe: “It is easier for us to look towards Asia than North America or some European markets.”
The newspaper said the IPO is planned for the first half of 2011 and that Macquarie’s Johannesburg office was an adviser of Lontoh on its fundraising plans. Lontoh is worth up to $1.5 billion, is planning a Hong Kong IPO in the first half of 2011, the newspaper said citing Lontoh’s chief executive Tshebo Kgadima.
Reuters commented that Lontoh would be the first African company to list in Hong Kong as the Hong Kong bourse is making an effort to attract more foreign companies to seek a listing in the territory.
The company describes itself on its website as “an unlisted public company active in the acquisition, exploration and mining of metallurgical and thermal coal. Though it is a new entrant in the field of coal mining and exploration, LontohCoal has established a presence and reputation as an independent coal mining company with a portfolio of metallurgical and thermal coal properties in South Africa and Zimbabwe.”
In May it bought 51% of Liberation Mining Pvt Ltd in Zimbabwe, and it lists its major prospects and sites as Lubimbi and Entuba in Zimbabwe and in Hlobane and Lephalele in South Africa.
October 5th, 2010 by Tom Minney
Top Zimbabwean Government women leaders on 30 September launched a US$1 million Zimbabwe Women Investment Fund, aimed at mobilising resources to enhance women’s participation in the mainstream economy. They aim to grow the fund to US$25 million within 3 years, according to a report in The Herald newspaper (www.herald.co.zw).
The fund was reportedly initiated by Minister of Regional Integration and International Co-operation Mrs Priscilla Misihairambwi-Mushonga. It will be administered by Commercial Bank of Zimbabwe. The initial capital is to be raised by issuing 100,000 shares at US$10 each.
The “private equity” fund would invest in short- and medium-term projects to provide both income returns and capital growth for members, and its investments could include listed and unlisted companies. Emphasis would also be on ensuring that women at “grassroot” levels benefit.
The trustees are Mrs Misihairambwi-Mushonga, Minister of Women’s Affairs, Gender and Community Development Dr Olivia Muchena, and the co-Minister of Home Affairs Mrs Theresa Makone.
Officially launching the fund, Vice President Joice Mujuru said the initiative was a demonstration that the time for Zimbabwean women to occupy their rightful space in the economy had come: “No non-oil exporting country has ever made the transition from developing country to developed country without the significant empowerment of women. It is quite apparent that the women of Zimbabwe are having a new economic empowerment vision, which can best be facilitated by women accessing financial and other resources.
“The establishment of this fund will facilitate the participation of Zimbabwean women in Africa’s growth, the establishment of a robust financial system and our progression from a developing nation to a global competitive society.”
August 5th, 2010 by Tom Minney
The African Development Bank (www.afdb.org) joined investors into the New Africa Mining Fund II (NAMF II) equity fund investing in mining projects throughout Africa, especially Southern Africa. The bank announced on 19 July a $25 million equity stake. NAMF II aims to raise $100 million to $300 million.
According to the International Finance Corporation website (www.ifc.org), the IFC has approved a proposal for a $30 million investment in May.
According to the AfDB press release: “Like the first New Africa Mining Fund (NAMF I), this fund will focus on the upstream stages of the mining investment cycle where value creation is highest, i.e. primarily exploration and pre-development activities by junior and intermediate companies. The Fund will invest over 5 years and will have a life of 8 years.
“The role of mineral resources in Africa’s economic development is undisputed, particularly in the context of the favourable market outlook as a result of strong commodity demand. The African junior mining market remains capital constrained and unable to fully harvest prevailing opportunities. NAMF II therefore intends to mobilize capital for this sector in order to take advantage of the market potential. The Fund is targeting a net return in excess of 20%.
“From a development perspective, the Fund is expected to positively influence private sector development, create local permanent and short-term jobs, support balanced revenue sharing, increase government revenues (+$900 million per year), ensure compliance with environmental standards and promote transparency through the Extractive Industries Transparency Initiative (EITI). The Fund will be guided in its governance strategy by a comprehensive Governance Codex developed in collaboration with the AfDB.
“The Fund’s investment will facilitate growth and expansion in greenfield projects across the continent, thus developing African companies in the private sector and promoting growth in a sustainable manner through its Governance Codex and Environmental and Social Management System (ESMS).”
According to its website (www.newafricaminingfund.co.za), NAMF I raised about ZAR564 million ($77.8 milllion) of committed capital and invested in early- to later-stage junior exploration, mining and beneficiation activities (“junior miners”) in Africa, in resources such as base metals, platinum group metals, gold, coal and other bulk minerals such as iron, manganese and chromite. Its target companies offer high-quality management and have the potential to become substantial mining operations or to be acquired by larger mining operators.
NAMF I capital funded exploration, feasibility studies or development and expansion. Investors included ABSA bank, the Development Bank of Southern Africa, BHP Billiton, Goldfields, Industrial Development Corporation, IFC, Exxaro, Sanlam and Harmony.
According to the IFC, NAMF II is to be run by a joint venture of Decorum Capital Partners (Pty.) Ltd. and a black economic empowerment investor. “Through the involvement of a BEE partner, DCP aims to introduce Historically-Disadvantaged South Africans (HDSAs) into the management team, to broaden the team, develop a succession plan and potentially achieve compliance with South Africa’s BEE Code, as it applies to private equity funds”.
The target commodity focus will include base metals, gold, platinum group metals, coal and potentially other bulk minerals, where the medium-to-long-term industry fundamentals are attractive.
DCP claims its investment professionals “have proven private equity investment track records and are ready to respond quickly to new investment opportunities. The team skills mix has a bias to experienced exploration, mining, processing and beneficiation professionals and also includes investment banking skills.”
July 26th, 2010 by Tom Minney
“Currently our capitalisation is just above US$3 billion and is falling, but if we attract big companies to list, especially in the mining and banking sectors, we can grow the size of the market up to levels of US$10 billion.” These brave words come from the new chair of the management committee of the Zimbabwe Stock Exchange (www.zse.co.zw), Ndodana Mguquka.
He added, according to a report in the Zimbabwe Independent newspaper (www.theindependent.co.zw): “As the new executive committee, we are looking forward to reviving the ZSE. At the moment there are a lot of issues that need to be sorted out, particularly the quality of our listings. We need to improve the quality of our listings to attract foreign and local investment.”
On 14 July, Finance Minister Tendai Biti had given a good summary of the ZSE’s woes in his 2010 Mid-Term Fiscal Policy Review (www.zimtreasury.org) to Parliament. He said: “Trading on the Zimbabwe Stock Exchange has largely been low, mainly due to market illiquidity in the first half of the year. Foreign participation has remained subdued with investments mainly confined to portfolio restructurings. Corporate results have also failed to uplift the equity market as most corporate are still undercapitalised and also suffering from subdued demand.”
He said that on average takeup of recapitalization rights issues had only been 50%, and underwriters had taken the balance.
“The industrial index which started the year at a high of 156.52 had dropped to 127.46 by June 2010, whilst the mining index fell from an opening of 209.8 to 143.08. Similarly, market capitalisation fell from US$3.97 billion in January 2010 to US$3.19 billion by end of June 2010. The poor performance is as a result of investors pulling out their investments reflecting depressed investors’ sentiment over perceived financial risks, especially following gazetting of the Indigenisation Regulations on March 1.
“In particular, foreign investors’ contribution to market turnover fell from between 40-50% to an average 20% per month.”
Mr Mguquka is the Managing Director of New Africa Securities. The management committee manages and controls the ZSE, settles disputes between members, examines all applications for listing securities for trading on the exchange, and enforces listing requirements with powers to grant, review, suspend or terminate listings so that securities would no longer be tradeable on the bourse. He took over from Bart Mswaka of Renaissance Securities who remains as his deputy.
March 5th, 2010 by Tom Minney
Imara Holdings Ltd (www.imaraholdings.com), an investment banking and asset management group with operations in 10 countries mostly in southern Africa, aims to expand in Zimbabwe, according to Zimbabwe’s Herald newspaper. It is currently listed on the Venture Capital Market board of the Botswana Stock Exchange (www.bse.co.bw) and the Herald reports that it wants to buy the rest of the shares in Zimbabwe’s Imara Capital Zimbabwe (Pvt.) Ltd (www.imaracapital.com), which it owns 32%, and also to dual list on the Zimbabwe Stock Exchange (www.zse.co.zw).
The report says that Imara Holdings has proposed a share deal in which local shareholders and the management will get a shareholding in the parent in return for their shares in the local company. The dual-listing on the bigger exchange could make the shares more liquid and the dollar-based ZSE is attractive to international investors. Imara management reportedly refused to comment, possibly while the transaction is under approval by authorities.
Imara Holdings website does not mention the transaction, although it has been publishing cautionary announcements since 31 July 2009. It describes the group as “medium sized”. It has offices in Botswana, Malawi, South Africa and the UK, and associate offices in Malawi and Zimbabwe as well as working relationships with Stockbrokers Zambia, Namibia Equity Brokers and Mac Capital in Dubai.
According to the Holdings website: “We are independent and privately owned, enabling objective decision-making in the service of our clients. We are active participants in the region’s financial markets and maintain one of the largest research coverage of regional equities. Funds under management exceed US$ 135m and funds under administration exceed US$750m.”
Imara group services fall into three primary operating areas:
• Corporate Finance & Advisory Services
• Institutional and Private Client Asset Management
• Securities Trading
Imara Capital is one of the associates listed in Zimbabwe, others being listed on the website as Imara Edwards Securities (Pvt) Ltd, Imara Asset Management Zimbabwe (Pvt) Ltd and Imara Corporate Finance Zimbabwe (Pvt) Ltd. The Herald report says these are wholly owned by Imara Capital.
On 8 January Imara signed a licence agreement to become the 7th member of Global Alliance Partners (www.globalalliancepartners.com), of which Mac Capital Dubai is already a member. Bernard Pouliot, chairman of GAP and of the Quam Group based in Hong Kong, said Imara joins the alliance at a very opportune time when Chinese interest in Africa is growing: “Imara is good for the alliance and for China. Alongside other members of GAP, we are committed to hit the ground running when an umbrella investment scheme by African countries is developed and eventually implemented.”
The other GAP members are Quam Financial Services Group for Hong Kong and China, Capital Partners Securities for Japan, KT ZMICO for Thailand, Thanh Cong Securities Company for Vietnam, and Westminster of Hudson Securities in USA.
In December, Imara Holdings announced it had recently acquired a majority equity stake in the Botswana stockbroking company Capital Securities (Pty) Ltd., one of 4 licensed stockbrokers on the Botswana Stock Exchange, established in March 1999.
“Shareholders are advised that negotiations relating to a further regional acquisition, which was announced in a Cautionary Announcement published on 31 July 2009 and in subsequent renewal announcements, are still ongoing. Shareholders are therefore urged to continue to exercise caution in their dealings in Imara securities,” says the Botswana announcement published in December.
January 28th, 2010 by Tom Minney
There is more trading on the Zimbabwe Stock Exchange after transaction costs were reduced, effective 10 January. Leading stockbroker Securities Africa (www.securitiesafrica.com) quotes Kingdom Financial Holdings (the website is given as www.kingdom.co.zw but wasn’t working when I tried) as saying: “Reflecting the reduction is transaction costs, daily trades shot up to USD 2.8m on 11 January 2010 and USD 2.4m on 12 January 2010 compared to only USD 338,000 recorded on the first trading of 2010 on 4 January 2010 and an average of USD 900,000 during the week ended 10 January 2010.
“The bullish sentiment on the ZSE saw share prices responding positively and this coupled with the increase in turnover explains the rise in the Industrial Index by 4.57% on 12 January 2010 followed by a 4.74% rise on 13 January 2010.”
Trading last week (to 22 January) was more than 435 million shares worth US$6.2 million, according to the Herald newspaper (www.herald.co.zw). The market ended marginally lower with the industrial index down 5% and the mining index 1%. The paper quoted one unnamed stockbroker as saying many investors may start to move into money markets as more stable, and this could see portfolio restructing and lower prices, as well as some potential equity bargains.
January 23rd, 2010 by Tom Minney
The Zimbabwe Stock Exchange is seeking to reinforce International Financial Reporting Standards again on its listed companies. Many had stopped using the standards in runaway inflation (which reportedly peaked at over 231 million percent), but the introduction of US dollar-based figures and transactions allows them to reintroduce it.
South Africa’s W. Consulting (www.wconsulting.co.za), in partnership with the Institute of Chartered Accountants of Zimbabwe (www.icaz.org.zw) recently held a workshop with local firms on IFRS. W. Consulting is an independent technical accounting & professional skills training and advisory business based in South Africa, advising many SA listed companies and reportedly accredited to the JSE Ltd.
Currently, a ZSE panel of experts is responsible for checking IFRS compliance. It encourages accurate and correct presentation of companies’ financial accounts including historical data and internationally comparable balance sheets and disclosure. This makes it easier for investors, including external investors.
According to a report in the Herald newspaper, ZSE chief executive Emmanuel Munyukwi said that IFRS compliance is compulsory for all listed companies, but that some did not comply for the last financial period.
According to the newspaper, head of W. Consulting South African operations Tapiwa Njikizana said IFRS compliance was critical for JSE-listed firms to attract and retain foreign investors’ participation: “An investor sitting in China, Japan or somewhere else in Asia requires historical data about a company in order to make decisions. Without adherence to IFRS, he needs a lot of time to understand how and why certain things are done in Zimbabwe, but with IFRS he knows standards are uniform across the globe,” he said.
The Institute of Chartered Accountants of Zimbabwe has fought hard to ensure that the country’s accounting profession remains accredited or recognised by the International Accounting Standards Board.
January 18th, 2010 by Tom Minney
New dealing charges for the Zimbabwe Stock Exchange came into effect on 11 January 2010, a week ago. Contrary to earlier expectations, it appears that Capital Gains Witholding Tax has not been withdrawn on sales proceeds of marketable securities. According a helpful note from stockbroker Securities Africa (www.securitiesafrica.com), the charges are:
BUY SELL
Brokerage 1.00% 1.00%
SEC Levy 0.18% 0.18%
Investor Protection Levy 0.05% 0.05%
ZSE Levy 0.10% 0.10%
Stamp Duty 0.25% -
Capital Gains Withholding Tax - 1.00%
VAT @ 15% of Brokerage 0.15% 0.15%
Total 1.73% 2.48%
Total Both Sides 4.21%
December 4th, 2009 by Tom Minney
Zimbabwe’s 2010 budget was released on 2 December by Finance Minister Tendai Biti and has generally received favourable response from analysts and businesspeople. It includes a cut in corporate tax rate from 30% to 25% and streamlining of the tax structure.
Transaction costs on the Zimbabwe Stock Exchange (ZSE) have been slashed by more than half, to 3.21% (buying 1.73%, selling 1.48%) from 7.5%, according to leading local stockbroker Imara Edwards Securities (www.imaracapital.com). The stockbroker comments: “Generally this should encourage trading resulting in better price discovery”. Prescribed asset ratios have been reintroduced for insurance and pension funds and local institutions may have to realign their portfolios.
Revision of ZSE costs:
Buying (%) Selling (%)
Brokerage 1 1
Stamp duty 0.25 0
Securities Commission Levy 0.18 0.18
Investor Protection Levy 0.05 0.05
ZSE Levy/fee 0.1 0.1
VAT @ 15% on Brokerage 0.15 0.15
Total Costs 1.73 1.48
Total Both Sides 3.21%
Prescribed Asset Ratios for Insurance and Pension Funds:
Pension Funds 10%
Long Term Insurance Companies 7.5%
Short Term Insurance Companies 5%
Source: Imara Edwards Securities
The stockbroker adds in their morning note: “Given the improved economic outlook we recommend investors take a long-term view on their holdings. With the increase in the civil servants’ salaries consumer stocks are likely to benefit, especially those in the defensive food business e.g. Dairibord, Delta, Innscor, OK Zimbabwe, Natfoods and Star Africa. The revival of the retail sector should accelerate exacerbated by the BIPPA agreement with South Africa which should unlock credit facilities for the local retailers.
“Given the demand for infrastructure reconstruction we believe construction companies are well poised to take on opportunities and counters likely to gain include M&R and PGI. In our view, the financial sector provides speculative opportunities. We are wary about the viability of massive growth in lending books as the quality of the book might be greatly compromised. Gradually growth in bank assets would give us great comfort. For those who seek an exposure into the financial we recommend Barclays and CBZ.”