Listed hospitality and tourism group African Sun Limited says the delisting of its shares from the Zimbabwe Stock Exchange (ZSE) to the US-denominated Victoria Falls Stock Exchange (VFEX) will enhance its possibilities for both local and regional growth.
This comes as the ZSE has been losing relevance in the face of persistent inflation pressures, with a number of companies complaining that raising capital on the market has become difficult.
African Sun’s Board of Directors approved a resolution on February 6, 2023, supporting the termination of African Sun’s ZSE listing and the introduction of the company’s shares to the VFEX.
“The VFEX’s potential to be a regional exchange can increase the visibility of a company listed on it, which can help attract new customers, suppliers and partners.
“The company’s migration from the ZSE to the VFEX potentially improves the company’s regional profile and commercial standing, strengthening the company’s prospects for both local and regional expansion.
“African Sun’s capital expenditure and future growth and expansion can be better supported by foreign currency capital and a widened investor base,” the company said in a circular to shareholders.
However, the termination of the listing of African Sun Limited on the ZSE and the subsequent listing by introduction on the VFEX are subject to approval at the company’s extraordinary general meeting, which will be held virtually by electronic means on Tuesday, March 28, 2023, at 1430 hours.
The VFEX offers a wider range of capital-raising alternatives, including the listing of debt in foreign currencies.
“The VFEX’s lower trading costs of 2.12% compared to 4.63% on the ZSE would enable shareholders to retain more value,” it said.
“Liquidity of the African Sun shares can be stimulated by the lower trading costs of the VFEX compared to the ZSE, as well as increased demand for the investment based on its ability to return foreign currency dividends.”
The company added that: “The provision of a de facto third-party USD valuation of the company enables African Sun’s existing shareholders to realise the actual value of their investment and to provide a more accurate benchmark of the stock’s performance while mitigating valuation volatility. Furthermore, the USD provides a hedge against the inflation of the ZWL, providing greater investor protection.”
If the proposed transaction sails through, African Sun’s last day of trading its shares on ZSE will be Friday, March 31, 2023, followed by the termination of its ZSE listing on Thursday, April 6, 2023, and the estimated completion of its VFEX listing on Friday, April 14, 2023.
African Sun closed its last trading day at $92.84 per share on the ZSE, recording a 5.3% drop from its previous closing price of $98.02. It began the year with a share price of $24.59 and has since gained 277% on that price valuation, ranking it first on the ZSE in terms of year-to-date performance.
Analysts say shareholders can be optimistic about African Sun knowing the stock has accrued an outstanding 158% over the past four-week period alone—best on ZSE.
The counter has a market capitalization of $77.3 billion, which is about 2.7% of the ZSE equity market.
Half Year Ended 30 June 2022 Results RECAP: https://etimes.co.zw/index.php/2022/09/27/african-sun-bouyed-by-rebounding-tourism-as-after-tax-profits-reach-zwl6-1bn/