VFEX in dramatic rebound

THE Victoria Falls Stock Exchange (VFEX) has dramatically emerged to capture some of Zimbabwe's biggest firms, with multinationals making bold moves to step into the waterfall in the past week.

Zimbabwe Stock Exchange (ZSE)listed crocodile breeder Padenga Holdings delisted on Friday and switched to the new bourse, marking an important step in its ambition to end a listing drought in the country, where the ZSE has struggled to attract counters.

Padenga is one of the world's largest suppliers of crocodile skins for luxury bags and shoes, counting leading global brands among its clients.

Ahead of Padenga's VFEX listing on Friday, New York-listed resources outfit Caledonia Mining Corporation, which controls Gwandabased Blanket Mine, announced it was going ahead with a plan to list at the waterfall.

That will make it the third counter at the bourse where SeedCo International became the first counter to list in October last year.

The VFEX has struggled to attract counters since kicking off operations in October last year, but has recently been a subject of significant attention by counters including CBZ Holdings, Zimbabwe's biggest financial services group, which has also said it plans to join the race.

Australia Stock Exchange-listed Invictus Energy, which is undertaking the highly prospective Muzarabani oil and gas project, has also expressed interest to list on the VFEX.

In a statement released on Thursday, Caledonia chief executive officer Steve Curtis said the listing would be conditional upon market conditions and the implementation of positive proposals made by the Zimbabwe authorities in respect of improved payments in US dollars for gold produced at Blanket Mine.

"Securing the VFEX listing is expected to take place during the course of 2021 and would be effected by a placing in Zimbabwe of depositary receipts to raise approximately US$3 million (to satisfy the requirements for local shareholder spread) and a subsequent introduction.

"The proceeds of the placing would be used for general corporate purposes," Curtis said.

"I welcome the step towards a more liberal financial environment, which is embodied in the proposed benefits attaching to a listing on the Victoria Falls Stock Exchange."

Caledonia said the proposed VFEX listing demonstrates its continued commitment to Zimbabwe and would allow its employees in Zimbabwe to participate more easily as company shareholders.

The VFEX has lined up incentives such as tax breaks and the ability to repatriate funds from Zimbabwe.

Speaking to Bloomberg ahead of the listing, Lloyd Mlotshwa, head of research at the Harare-based IH Securities, said Padenga's listing marked an important step towards attracting more firms.

"We see this as an early step to enhancing the attractiveness of the VFEX by adding a quality, hard-currency-generating asset for investors to consider," Mlotshwa said.

In an earlier analysis of the move, IH Securities said Padenga's mining business, Dallaglio, will be the most immediate beneficiary of the strategy.

IH said a VFEX listing would open pathways for Dallaglio to pounce on new gold assets and position itself to benefit from attractive forex retention thresholds announced by the ministry of Finance recently.

The thresholds present growth opportunities for gold miners and VFEX-listed firms.

Padenga swooped on Dallaglio about two years ago, as it diversified from its traditional crocodile skin processing business into gold mining in a surprise move.

Through Dallaglio, Padenga gained a foothold on Eureka Gold Mine, which returns to production this month following a US$40 million injection to restart operations.

The transaction also gave Padenga access to Chegutu-based Pickstone Mine, a 60kg per month gold asset.