• OK Zimbabwe raised US$20 million through a fully subscribed renounceable rights offer, part of a broader US$30.5 million capital restructuring plan
• Proceeds will be used to settle legacy debts, bolster working capital, support suppliers, and fund capital expenditure, including store refurbishments, cold chain upgrades, and technology improvements to enhance operational efficiency
• OK aims to stabilise operations, modernise its store network, and strengthen its competitive position amid a challenging retail environment

Harare - OK Zimbabwe Limited, the country’s largest supermarket chain by store count, has successfully raised US$20 million through a fully subscribed renounceable rights offer, according to the latest circular.

The achievement marks a significant milestone in its ongoing capital restructuring programme aimed at restoring profitability and operational stability.

The rights offer, which closed on 4 August 2025, attracted strong shareholder participation, with 76.94% of shares taken up by existing investors and the remaining 23.06% acquired by underwriters.

“The rights offer was subscribed through a combination of shareholders’ take-up and shares taken up by the underwriters in accordance with the underwriting agreement,” the group said.

The transaction forms part of OK Zimbabwe’s broader plan to secure US$30.5 million in new capital over a multi-year period. This drive combines equity financing with a property disposal programme to unlock value and reduce debt.

The company has already put several non-core real estate assets on the market, with offers currently under review to ensure transactions safeguard shareholder value while freeing up liquidity for core retail operations. The company  has been granted a 12-month mandate by shareholders to complete these disposals, with hopes that some sales will be concluded before the year’s end.

As of February 2025, the retailer owed suppliers approximately US$24 million and had accumulated over US$5 million in other unpaid liabilities. These debts disrupted supply chains and triggered widespread stock-outs across many of its 72 branches, forcing some outlets to scale back operations and leading to the closure of five stores together with the Foodlovers market franchisees due to unprofitability.

High-interest borrowings and delayed supplier payments had become a major drag on performance, with finance costs eroding margins even in years of stable revenue. The group’s operating environment was further complicated by Zimbabwe’s volatile currency landscape, where the government-regulated exchange rate set by the Reserve Bank of Zimbabwe (RBZ) has created pricing and liquidity challenges for formal retailers.

The proceeds from this rights offer will go towards clearing these legacy debts, bolstering working capital, funding capital expenditure projects, and strengthening supplier support  steps expected to stabilise operations and restore confidence among trading partners.

The retailer, which operates brands such as OK Stores, Bon Marché, and OK Mart, says part of the new capital will be directed toward supplier pre-payments and flexible settlement terms to ensure steady stock availability. This supplier support is especially critical in an environment where many manufacturers demand USD upfront to protect against local currency depreciation.

Capital expenditure will target store refurbishments, cold chain improvements, and point-of-sale technology upgrades aimed at improving customer experience and operational efficiency. These upgrades will help OK Zimbabwe modernise its outlets to match regional competitors, which have increasingly focused on digital payment integration and improved in-store merchandising.

The capital raise comes at a time when Zimbabwe’s retail industry is experiencing mixed fortunes. While US dollar transactions have offered some stability, local currency volatility, high interest rates, and reduced disposable incomes have weighed on sales volumes for formal retailers.

Informal markets  which avoid VAT, PAYE, and other statutory costs  continue to capture a significant share of consumer spending, often undercutting formal retailers on price. This has forced companies like OK Zimbabwe and TM Pick n Pay to rethink pricing strategies and promotional campaigns, as well as explore more cost-efficient procurement models.

The competitive landscape is also shifting as smaller chains, niche grocers, and wholesale clubs gain market share in urban centres, particularly in Harare and Bulawayo. OK Zimbabwe’s response has been to streamline operations, focus on profitable locations, and use its wide footprint to negotiate better terms with suppliers.

Despite these headwinds, the rights offer’s full subscription signals sustained investor confidence in OK Zimbabwe’s turnaround strategy. In a market where capital raises often struggle to attract commitments, the group’s ability to secure a subscription reflects its strong brand equity and deep market penetration.

Investors appear reassured by management’s cost-cutting measures, including inventory optimisation and energy efficiency projects, such as switching to solar in select stores to reduce reliance on costly grid power and diesel generators. These initiatives are seen as crucial for improving margins in the long run.

The group remains  optimistic as it works to finalise property disposals within the shareholder-approved timeline  and if  deployed effectively, the US$20 million could give OK Zimbabwe the breathing room to weather currency uncertainties, modernise its store network, and compete more aggressively with both formal rivals and the sprawling informal sector.

 Equity Axis News