Zim firms ride political challenges: Report

ZIMBABWEAN companies remained active on the capital markets, despite the political challenges in the country in 2017, managing to raise $76 million in 2017 through two Financial Offers (FOs), the only ones in the last five years.

The Zimbabwe Stock Exchange has seen only three equity capital markets transactions over the period 2013 to 2017, according to the latest PwC report titled “African Capital Markets Watch 2017”. Two where FOs that raised $76 million, Econet $58 million and First Mutual $17,5 million.

The other equity capital market transaction by a Zimbabwean company was an outbound initial public offering undertaken by Brainworks Capital, which debuted on the Johannesburg Stock Exchange’s Main Board last year, the first local firm to do an IPO on JSE, raising $23 million.

PwC says the political developments that ushered in a new political leadership in November 2017 could bring stability to a market plagued by policy driven economic hardship.

“During 2017, the Zimbabwe Stock Exchange (ZSE) indices rode the highs and lows of the country’s political drama and its resurgent currency shortage; despite these challenges, Zimbabwean companies stayed active in 2017, with FO proceeds raised on the ZSE by Econet Wireless Zimbabwe and First Mutual Holdings of $58,3 million and $17,3 million, respectively, and the crossborder IPO of Brainworks Limited, the first Zimbabwean company to have a primary listing on the JSE,” PwC said in the report released yesterday.

Overall, African equity capital market transaction volume and value improved in 2017 over 2016. In terms of value, 2017 saw the largest IPOs over the trailing five-year period, and an increase in the total value of equity capital market (ECM) transactions of 49 percent between 2016 and 2017 in dollar terms. Since 2013, there have been 519 African equity capital markerts transactions, raising a total of $52,7 billion, up 17 percent in terms of capital raised over the previous five-year period.

Overall, ECM activity in 2017 was the second highest since 2013 in terms of volume with 121 issuances, up 25 percent over the prior year, and the highest since 2013 in terms of value, driven mainly by a few significant IPOs and FOs during the year.

Although levels of market capitalisation for many of Africa’s exchanges remain low in a global context, a number of initiatives have taken place to deepen liquidity and provide investment opportunities for foreign and domestic investors alike.

Regulators in some African countries have made efforts in recent years to encourage companies in specific sectors to list shares on their domestic stock exchanges.

Additionally, enhanced regulatory capital requirements have driven financial services companies to access both the debt and equity capital markets over the past year.