Seed Co Limited joins VFEX great trek

(Last Updated On: January 20, 2023)

BUSINESS REPORTER

 

Seed producer Seed Co Limited is set to migrate to the Victoria Falls Stock Exchange (VFEX) becoming the latest listed concern to be lured by the incentives offered by the dollar-denominated bourse.

The planned migration of Seed Co Limited to the VFEX comes barely two years after the central bank blocked its planned merger with VFEX-listed Seed Co International that would have seen the creation of one company listed on the dollar only bourse.

Seed Co Limited was supposed to delist on the Zimbabwe Stock Exchange (ZSE) had the authorities blessed the transaction.

In a cautionary statement yesterday Seed Co Limited said: “Shareholders of Seed Co Limited and the investing public are advised that the board has approved the migration of the company’s listing from the Zimbabwe Stock Exchange to Victoria Falls Stock Exchange.”

It said shareholders have to “exercise caution when dealing with the company’s securities”, adding that further announcements would be made in accordance with regulatory requirements “as and when there are material developments”.

Last year, consumer staples concerns Simbisa Brands and National Foods Limited migrated to the VFEX. Innscor Africa and Axia Corporation are their way to the dollar-denominated bourse.

In 2021, Padenga and Bindura Nickel Corporation migrated to the VFEX.

All the companies that are migrating to the VFEX are lured by incentives that were rolled out by the government to attract listings.

Companies that are migrating to the US dollar-only bourse say the listing enables existing shareholders to realise the United States dollar value of their holdings as compared to the ZSE where local currency returns were subject to hyperinflation.

They say listing on the VFEX would allow them to take advantage of offshore settlement options which allow investors to efficiently repatriate their dividends.

The VFEX has lower trading costs of 2.12% compared to 4.63% on the ZSE, which will improve the shares’ liquidity.

The VFEX also has tax incentives that enable the investor to retain more of their returns versus the ZSE.

Companies listed on the dollar-denominated bourse also enjoy 100% retention of their export proceeds. They do not beg the central bank to increase the retention threshold.

 

 

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