Export incentives lure Padenga towards VFEX

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  • Driven by newly introduced export incentives
  • Meant to greatly benefit mining ventures
  • Move signalling general growing interest in the VFEX after listing incentives

Harare – Crocodile breeder and new miner, Padenga Holdings is planning to terminate its listing on the Zimbabwe Stock Exchange (ZSE) and migrate to the U.S Dollar denominated Victoria Falls Stock Exchange (VFEX), courted by incentives introduced by the government for exporters in May.

This proposal was reportedly forwarded at a board meeting held on May 4, 2021, and the company’s shareholders are expected at an Extraordinary General Meeting (EGM) on the second of July to deliberate.

In a notice released earlier today (June 11, 2021) the company said the move was motivated by the decision by the finance ministry to incentivise increased production by exporters listed on the VFEX.

“The migration of the listing from the ZSE to the VFEX is driven by the need to benefit from the incentives articled by the Minister of Finance and Economic Development, and has not been initiated by any shareholder per se, and will not prejudice minorities,” they said.

The export incentives introduced by the government in May will see all exporters who exceed their historical monthly average exports retaining 80% of forex earned from incremental exports, while those listed on the Victoria Falls Stock Exchange (VFEX) are now entitled to retain 100 percent of their incremental earnings.

Miners will also be allowed to retain 80% of any produce incremental to their monthly average and allowed to export the extra produce directly although under the supervision of Fidelity Printers and Refiners (FPR).

This is probably the main driver for the migration seeing as Padenga recently bought a 50.1% stake in gold miner, Dallaglio, which contributed 57% to the company’s total revenue in the last fiscal year and Eureka mine which is expected to be commissioned in July.

RBZ was taking 40% of all export earnings irrespective of the exporting company’s performance, a policy that was in its initial form, seriously disadvantaging those in the exporting business as they ended up subsidizing non-exporters at the auction.

Padenga also said the move will see the company becoming better poised to attract fresh capital.

“The VFEX will allow Padenga to raise capital in foreign currency from a wider and deeper potential market, to expand existing business, acquire or establish new business and fund acquisitions for both the Company and its gold mining subsidiary, Dallaglio Investments (Private) Limited.”

In the same vein, the move is also said to be meant to improve foreign investment in the company which was one of the main reasons for the establishment of the U.S dollar denominated bourse following the ZSE’s decreasing ability to attract foreign participation.

“We want to potentially open Padenga to outside investment, improve its recognition, commercial standing and investor profile by enhancing capacity for repatriation of capital and dividends,” the company further stated.

Another reason given is that the company wants to enable its existing shareholders to realise the USD value of their holdings in the market thus allowing greater liquidity and the broadening of the shareholder base.

Since its inception, VFEX has struggled to attract new listings, with Seed Co International being the only one. Following the announcement of the incentive scheme, however, Caledonia stated it is considering a listing on VFEX as well as CBZ, the country’s largest bank, has also expressed interest in the transaction.

Equity Axis News.

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