MICROFINANCIER, GetBucks Microfinance Bank Limited has reached a decision to exit the Zimbabwe Stock Exchange (ZSE) citing that the benefits of trading on the bourse are insignificant for the firm.
In a circular to shareholders, the financier's company secretary Muchineripi Chigwendere said the decision is a result of a thorough process that revealed that maintaining the listing is of little value for the company.
"The Board are of the view that in the current environment in Zimbabwe, a listing on the ZSE is accruing little benefit to the company while incurring considerable costs. Trading of the GetBucks Bank shares has not represented a realistic valuation.
"As at the Last Practicable Date the Company was trading at ZWL 38.50 (thirty-eight dollars and fifty cents in Zimbabwe dollars) per share which represents a market capitalisation of ZWL 44.8 billion or twenty-nine (29) times the value of shareholders equity in the business as at 31 December 2022," he said.
Chingwendere said the valuation makes equity capital raising initiatives difficult with the inability to raise capital from institutional investors implying that the listing has limited value in terms of a mechanism to raise capital.
"In the face of a difficult trading environment, the board has decided to propose to shareholders it's delisting from the ZSE due to the rationale outlined below," he said.
The company contends that the ZSE has recently implemented new reporting regulations that have increased the issuance of shareholder reporting from semi-annual to quarterly with the bourse precluding the directors and employees from trading in the shares during a closed period.
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Given that quarterly reporting is now mandatory for ZSE listed companies, the closed period is any time between the end of a financial quarter and the associated publication for shareholders.
"In effect, this means that the company is operating under closed period conditions for roughly half the year, which impacts its ability to buy back shares while listed. Further to this, raising capital on the ZSE has become an expensive undertaking because of the need to produce circulars to shareholders to facilitate capital raising transactions.
"These circulars require input from professional advisors, the production of hyper-inflation and pro-forma accounts, and carry a production and distribution cost," he said.
GetBucks also said the ZSE also levies charges for inspection of such circulars and while the need for best practice on the ZSE is understood, it is to the detriment of efficient capital raising for a small, illiquid company such a GetBucks Bank.
"Fees and Levies imposed by the ZSE that are based on the market capitalisation have also become onerous expenses for the company," the company added.
