Padenga delists, heads for VFEX

ZIMBABWE Stock Exchange (ZSE)-listed crocodile breeder, Padenga Holdings is set to delist today before switching to the Victoria Falls Stock Exchange (VFEX).

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.

Padenga traded on the ZSE for the last time on Monday ahead of the switch to the VFEX, which exclusively trades in foreign currency. It is set to list on the VFEX soon after leaving the ZSE.

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

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 this would mark an important step towards attracting more firms to head to the resort city.

"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.

"We see potential for a growth pathway particularly in Dallaglio via acquisitions within the gold space motivated by the new incentives articulated by the Finance and Economic Development Ministry and in the shortterm an uplift in earnings caused by a higher effective real gold price achieved based on greater foreign currency retention.

"The listing on the VFEX enables shareholders to unlock a real United States dollar valuation of the business, with capital gains and dividends realisable in hard currency. Downside risk is liquidity on the VFEX itself which may potentially create an initial discount on valuation. We, however, believe this will resolve itself in the medium term as other assets migrate to the VFEX deepening the available asset base and attraction levels," IH noted.

Following its much hyped opening in october last year, VFEX has struggled to attract listings.

Seed Co International, which listed on the first day, remains the only counter eight months on.

But Caledonia Mining Corporation, the major shareholder of Gwanda-based Blanket Mine, has indicated that it is looking at the possibility of listing on the new bourse.