Battle for survival: Embattled OK Zimbabwe inches closer to securing US$30m capital lifeline

SAMANTHA MADE

OK Zimbabwe Limited, once regarded as a corporate bellwether in the country’s retail sector, is inching closer to securing a critical US$30m capital lifeline in a last-ditch effort to steady its financial ship after months of mounting losses and operational turmoil. The capital raise—which will involve a blend of a rights issue, private placement, and debt instruments—is now at an advanced stage, the company has announced.

The retailer, which operates one of the largest supermarket chains in the country, has been struggling to maintain its footing in a volatile and inflation-ravaged economy. Soaring input costs, chronic electricity outages, foreign currency shortages, and a sharp drop in consumer spending power have combined to create a perfect storm that has battered the group’s profitability and weakened its once-proud brand.

Company Secretary Margaret Munyuru confirmed that the capital raising process is progressing toward its final stages.

“….discussions regarding the proposed capital raise in the sum of up to US$30m are now at an advanced stage,” said Munyuru.

She added that more specific details of the transaction would be revealed soon and that shareholders would be provided with the necessary documentation, including a circular and a notice for an Extraordinary General Meeting (EGM) to approve the initiative.

“The company will then publish a circular to shareholders incorporating notice of an Extra General Meeting of Members for the purpose of considering and approving the capital raise,” Munyuru said.

The capital raise is part of a broader turnaround strategy aimed at restoring OK Zimbabwe’s competitiveness and operational strength.

Last month, the company signaled that the new funding would be used to bridge a widening liquidity gap and stabilize its financial position, which has been under sustained pressure due to a mix of macroeconomic shocks and internal inefficiencies.

“In light of the foregoing, the Board of Directors has resolved to undertake a capital raise in the sum of up to US$30 million to bridge the funding gap and stabilize the Company’s financial position. The capital raise will be a combination of a rights issue, private placement and debt instrument,” Munyuru stated.

The proposed rights issue will give existing shareholders the first right to purchase additional shares at a discounted price, enabling the company to raise capital while retaining loyalty from its investor base. Alongside this, the private placement will target strategic institutional investors who bring not just funding, but potentially governance expertise and long-term support. The use of debt instruments, meanwhile, allows OK Zimbabwe to tap into medium-term financing without immediately diluting shareholder value.

Once a corporate bellwether and pillar of formal retail in Zimbabwe, OK Zimbabwe has been under siege in recent years. Its market dominance has been eroded by the rise of agile competitors, both formal and informal, who have managed to sidestep some of the regulatory and supply chain challenges that have weighed heavily on legacy players.

Increased competition from South African-backed retailers such as Pick n Pay—through its local partner TM Supermarkets—as well as the rapid expansion of budget-friendly retail formats like Choppies, has eaten into OK’s market share. Simultaneously, the proliferation of informal markets, where goods are often sold at lower prices in hard currency, has undermined formal retail models.

The company has also faced internal headwinds. A series of leadership changes in the past few years unsettled strategic direction, and supply chain inefficiencies have led to stock-outs, poor customer service, and a declining in-store experience.

Financial statements have painted a grim picture: falling revenues in real terms, shrinking margins, and a steady accumulation of debt. Analysts have raised concerns over working capital constraints and the company’s ability to continue funding core operations without an injection of fresh capital.

Analysts say the decision to combine equity and debt in the capital raise reflects a prudent approach by management to balance short-term liquidity needs with long-term sustainability. Rights issues offer a lifeline without handing over control to external investors, while private placements could attract new partnerships, and debt instruments provide flexibility.

“The structure of the capital raise shows the board’s intent to diversify funding sources and not rely solely on shareholder goodwill,” said independent financial analyst Ngonidzashe Mukusha. “However, this is a tightrope walk. Success hinges not only on raising the money but on how effectively it is deployed to generate returns and restore confidence.”

Mukusha added that the timing of the raise—amid economic uncertainty and regulatory unpredictability—could make it challenging to attract significant foreign participation, even though the company is listed on the Zimbabwe Stock Exchange, which has recently witnessed an uptick in foreign investor interest following reforms.

At the heart of OK Zimbabwe’s turnaround will be the ability to restore trust—both from investors and the Zimbabwean public. In the past, the company commanded immense brand loyalty, with a nationwide footprint and strong recognition for quality and reliability. But the past few years have tarnished that image.

The company has pledged that proceeds from the capital raise will go toward supply chain improvements, technology upgrades, store refurbishments, and working capital. If executed efficiently, these investments could begin to reverse years of underperformance.

“There’s no doubt that OK still has a strong brand heritage,” said Rutendo Gopo, a retail sector consultant. “But to compete, it needs to modernize quickly. The capital raise must be followed by visible and impactful changes in-store—stock availability, pricing, layout, and staff service all need to improve dramatically.”

Munyuru concluded her latest cautionary note with a reminder to shareholders to continue exercising care in trading the company’s shares while the capital raise is in motion.

“Shareholders and the investing public are advised to continue exercising caution when dealing in the Company’s shares. Further announcements will be made in accordance with regulatory requirements and when there are material developments,” she said.

If OK Zimbabwe successfully completes the raise and deploys the funds effectively, it could become one of the biggest retail comeback stories in Zimbabwean corporate history. Failure, however, could accelerate its slide into further distress.

For a company that has stood for nearly 80 years, this capital raise is not just a financial transaction—it is a defining moment in a battle for survival.

The coming weeks will test whether investor confidence can be revived and whether the once-formidable corporate bellwether still has what it takes to reclaim its place in Zimbabwe’s shifting retail landscape.