- GetBucks Bank considers delisting from ZSE
- Limited liquidity and inflated valuation challenges
- Burdensome costs and reporting restrictions cited
Harare- GetBucks Bank, a prominent financial institution in Zimbabwe, is considering the termination of its listing on the Zimbabwe Stock Exchange (ZSE) as it believes maintaining the listing on the ZSE is providing limited benefits while incurring significant costs.
In a circular released on the 10th of August 2023, the Bank said trading of GetBucks Bank shares has failed to reflect a realistic valuation, making it challenging for the bank to raise capital, hence, the board has decided to propose the delisting to shareholders.
“The Board of Directors of GetBucks Bank convened a meeting on Friday 9 December 2022 where they considered the termination of GetBucks Bank’s Zimbabwe Stock Exchange Listing.
“The Board are of the view that in the current environment in Zimbabwe, a listing on the Zimbabwe Stock Exchange is accruing little benefit to the Company while incurring considerable costs,” read the circular.
The rationale behind the proposed voluntary termination of the listing is multi-layered. Firstly, GetBucks Bank faces limited liquidity in the market. Out of a total of 1.163 billion (1,163,118,377) issued shares, only approximately 0.03% are held by approximately 498 minority shareholders outside the top 20 shareholders.
The trading activity on the ZSE in the past six months has accounted for less than 0.006% of the total shares in issue on an annualized basis. This limited liquidity poses challenges for shareholders seeking to buy or sell shares, hindering the bank's growth and investor participation.
Furthermore, the market capitalisation of GetBucks Bank has proven to be unrealistic and an impediment to attracting strategic long-term equity investment into the business. According to the circular, as of the Last Practicable Date, the bank's market capitalisation stood at over ZWL 44.8 billion, which is twenty-nine times the value of shareholders' equity in the business as of December 31, 2022. This inflated valuation not only distorts the true value of the bank but also results in increased levies paid to the Zimbabwe Stock Exchange.
Onerous reporting structures imposed by the ZSE also contribute to the rationale for delisting. The introduction of new reporting regulations mandates quarterly shareholder reporting instead of semi-annual reporting. During closed periods, directors and employees are prohibited from trading in shares. With the shift to quarterly reporting, the closed period extends for approximately half the year, limiting the bank's ability to engage in share buybacks while listed. This restriction hampers the bank's flexibility in managing its stock and responding to market conditions.
In addition to reporting challenges, the Bank said the costs associated with listing on the ZSE have become increasingly burdensome for GetBucks Bank. Raising capital on the exchange has become an expensive endeavour due to the need for circulars to facilitate capital raising transactions. These circulars require input from professional advisors, the production of hyper-inflation and pro-forma accounts, and carry production and distribution costs.
Moreover, the ZSE levies charges for the inspection of such circulars. The cumulative effect of these costs, coupled with fees and levies based on market capitalisation, has become prohibitive for a small and illiquid company like GetBucks Bank.
Considering the current economic environment in Zimbabwe, where the benefits of maintaining a listing on the ZSE are outweighed by the substantial costs, the Board of Directors of GetBucks Bank has concluded that a delisting is in the bank's best interest. The inability to raise capital from institutional investors and the ongoing legal, compliance, and audit costs have made the listing less valuable as a mechanism for capital raising and shareholder returns.
Moving forward, GetBucks Bank will propose the delisting to its shareholders, seeking their approval for this strategic decision. By delisting from the ZSE, the bank aims to alleviate the additional costs associated with listing without corresponding benefits, providing greater flexibility to navigate the challenging trading environment. The bank will keep its shareholders informed and provide updates on the delisting process in due course.
Equity Axis News
