LonZim raises US$1,5m for working capital
Tuesday, 20 September 2011 02:00
Bright Madera Senior Business Reporter
AIM-listed investment company, LonZim Plc has raised US$1,5 million from Consilium Emerging Markets Return Fund for its working capital. The group secured the funding via a placing of 3 988 439 shares of 0,01 pence each at a price of 23 pence per share. These represent about six percent of the company's enlarged issued share capital.
A private placement is a funding round of securities, which are sold without an initial public offering, usually to a small number of chosen private investors.
LonZim told shareholders last week that the placement would provide working capital for the group's existing businesses and provide it with the ability to continue implementing its investment strategy.
"Consilium is a substantial shareholder in the company and therefore its participation in the placing is a related party transaction for the purposes of the AIM rules for companies,: said the company.
"Having consulted with WH Ireland, the nominated advisor to the company, the directors of the company consider the terms of Consilium's participation in the placing to be fair and reasonable in so far as all the shareholders of the company are concerned."
Following admission to trading on AIM, the company's total issued share capital will be 58 133 908 ordinary shares.
The Zimbabwe focused investment conglomerate, which has a primary listing in London, is expected to list on the Zimbabwe Stock Exchange to meet indigenisation requirements.
The firm's secondary listing on the ZSE was expected to be complete in the second half of the year.
Upon listing the firm's shares would have full fungibility on both stock markets.
Full fungibility refers to a situation where a listed company's shares are tradable and/or transferable between stock markets on which the firm is listed.
LonZim believes the proposed listing on ZSE will help strengthen its growth prospects and as a result maximise the value of the company and its shares for the benefit of shareholders.
The group also indicated that the proposed listing on the local bourse would facilitate direct investment in company by locals, local corporations and financial institutions and also support economic growth in line with the firm's objective of playing an integral role in the revival of the country's economy.
This would also provide LonZim with additional opportunities to access capital for growth, future expansion and the implementation of its existing plans.
Labels: LONZIM, ZSE
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Indigenisation set to spark surge in ZSE listings
Business Reporter
THE Zimbabwe Stock Exchange could witness an upsurge in listings as companies seek to meet the indigenisation obligations. Through public listings, foreign shareholders will reduce their stake by selling part of their equity to local investors while at the same time retaining the controlling shareholding.
The Indigenisation and Economic Empowerment (General) Regulations came into force on March 1 2010 and companies are required to submit their plans to Government on how they intend to fulfil the requirements of law and to have 51 percent ownership in the hands of locals in the next five years.
Analysts believe public listings are the most viable option to comply with the country’s indigenisation thresholds.
"The best option to indigenise is to list on the Zimbabwe Stock Exchange. Companies may come up with a plan to gradually float equity to local shareholders during the next five years.
"Foreigners may also retain a controlling stake," said an investment analyst with a Harare-based research company.
Foreign-owned companies that are already considering listing on the ZSE include Telecel Zimbabwe and Premier Banking Corporation.
Premier majority shareholder African Development Corporation has indicated that it would dispose part of its stake to local investors within five years though listing on the ZSE.
Since stocks began trading in foreign currency last year in February, the market has been largely driven by foreign investor funds but locals have remained in control of the market.
Liquidity constraints have been a major factor while local participation on the equities market has been insignificant.
"During this period when the country is facing liquidity constraints, companies can start by issuing little equity which can be easily absorbed by the market and then increase it as the liquidity improves," said the analyst.
ZSE chief executive Mr Emmanuel Munyukwi concurred that public listings could achieve the indigenisation goals.
"They could be, of course, some challenges since the shares are traded on a free-buyer/free-seller basis, but I believe listing could be the best option to meet the desired goals," he said.
Mr Munyukwi said most companies on the ZSE were already indigenised "and we are conducting a verification exercise".
He added that listings would also help companies to raise working capital.
"Companies used to borrow money from banks but bank finance remains a challenge," said Mr Munyukwi.
Over the past five years, Zimbabwe witnessed only three listings — Redstar in 2006, Zeco Holdings in 2008 and TN Holding in December last year — as a result of inconsistent policies which restricted trade.
Unlike the private arrangements, public listings would be more transparency and ensure greater participation by the public
The indigenisation regulations require that all business with an asset value of US$500 000 comply with requirements of the Act.
In line with the objective of the Act to achieve 51 percent indigenisation shareholding, the regulations stipulate that existing businesses meet the required 51 percent shareholding in a period of five years.
New businesses are also required to achieve the same target within five years from the date of commencement of business.
Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), ZSE
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ZSE to levy capital gains tax
by
28/01/2010 00:00:00
THE Zimbabwe Stock Exchange (ZSE) has been forced to re-introduce Capital Gains Withholding Tax after treasury advised that the legal frame-work to scrap the levy has not yet been put in place. Capital Gains Withholdings Tax is pegged at
1 percent of all traded shares on the bourse.
The announcement by the ZSE now brings the total transaction cost to 4.21 percent, up from the 3.21 percent announced by finance Minister Tendai Biti in his national budget.
“It has been drawn to our attention that the legislation covering the applicability on capital gains withholding tax on marketable securities has in fact not been changed and accordingly the tax must continue to be levied,” the ZSE said.
The Ministry of finance revised downwards transition costs on the ZSE from 7.5 percent in an effort to increase activity on the bourse which was also being negatively affected by lack of liquidity resulting in thin trading volumes.
Meanwhile in Wednesday’s trade the benchmark industrial index went down 1.48 percent to close at 154.85 points on the back of widespread losses led by PPC which took a 25 cents dip at 255 cents while Econet gave up 11.01 cents to close at 478.99 cents.
Old Mutual traded 5.01 cents softer at 159.99 cents while SEEDCO eased 4 cents to close at 90 cents. Modest gains were recorded in Natfoods up 0.90 cents at 101 cents as well as Hunyani, Barclays, TSL and NMB.
The mining index shed 2.86 points (1.39 percent) to close at 203.57 points as Falgold dropped 2 cents to trade at 7 cents and RioZim retreated a cent to 310 cents whilst Bindura and Hwange traded unchanged at 23 cents and 30 cents.
Labels: CAPITAL GAINS TAX, TAXATION, ZSE
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Boon for Zim exporters as exchange rate is floated
New Ziana.
Harare. — Zimbabwe Stock Exchange listed export-oriented companies stand to benefit most from the recently floated exchange rate not only through improved income but also a surge in share prices, analysts said on Tuesday. Two weeks ago, the Reserve Bank of Zimbabwe allowed the local currency to float freely, which immediately saw a huge jump in the exchange rates for most hard currencies.
For example, the local dollar was previously fixed at $30 000 to the US greenback, but this has since shot up to above $200 million to one US dollar.
Analysts said exporting companies, which had for a long time cried foul over the unviability of the fixed exchange rate, were expected to announce improved earnings as early as the next reporting season.
These include heavy exporters such as the Cotton Company of Zimbabwe and most mining companies.
Tourism counters such as African Sun and Rainbow Tourism Group were also likely to benefit from the floated exchange rate, as they earn significant income from foreign-currency paying travellers, and were managing a number of hotels outside the country.
Analysts said the increased earnings potential of the companies had already begun to whet the appetite of the investing public, expected to lead to a rally in their share prices.
An analyst with Interfin Securities told New Ziana that the floated exchange rate "was definitely going to have an impact on the share prices of listed export companies".
"Already we have seen an upward movement in the share prices of some agro counters and mining firms such as the Cotton Company of Zimbabwe and Interfresh because of the export factor," he said.
Zimbabwe Allied Banking Group research analyst Mudzingwa Nhewatiwa also concurred, adding that use of the inter-bank exchange rate meant that export companies would now get value for their money.
"This is going to boost their earnings as well as their performance. There is now an incentive for them to actually increase their production as some had reportedly scaled down," he said.
He said the fixed exchange rate grossly impacted on the companies’ earnings as there was a widening mismatch between income and operating costs.
The inter-bank rate, he said, was responsive to inflation. — New Ziana.
Labels: EXPORTS, ZIMBABWE, ZIMBABWE DOLLAR, ZSE
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