GetBucks IPO underwriting reflects derth of capital in Zim
CAPITAL and investment money is increasingly drying up in Zimbabwe, with the initial public offering (IPO) of GetBucks being massively underwritten, although experts said the company was taking up position to benefit from a potential recovery in the economy last Friday.
The Zimbabwe Stock Exchange (ZSE) has been subdued in the past year and this year it has opened on a low. However, the listing of GetBucks on Friday was lauded as a show of confidence in the economy by investors despite the IPO being massively underwritten.
GetBucks Zimbabwe is 55 percent ownded by Mauritius-registered GetBucks, while local finance company, Brainworks Capital owns about 30 percent of the company. Pension funds in Zimbabwe hold the remainder of the shares.
In trade on Thursday ahead of the Greatbucks listing on the ZSE on Friday, the market slipped a further 0.76 percent to close at a total market capitalisation of $3.12 billion (R52.30bn), while turnover amounted to $5.476 million.
The indicative industrial index shed 0.38 percent to close at 111.14 points. GetBucks said its IPO had been undersubscribed at a low rate of 2.29 percent.
The financial services company’s listing on the ZSE ended a drought of new listings on the local bourse, with investors having last popped the champagne on the equities market in 2007 at the last listing of Zeco Holdings.
“This listing has been low key, raising a small amount of money from few individuals. So the GetBucks IPO results could be seen as disastrous,” said Rob Stangroom, an investment expert.
Another executive, Kennedy Lemani, who is the general manager for Fundamental Technologies, said the under-subscription of GetBucks was reflective of the Zimbabwean economy.
Zimbabwe is struggling to shrug off an economic slowdown, with growth seen at a lowly 1.5 percent this year.
“The response is a reflection of the current economic conditions, among other issues, lack of liquidity, disquiet over constant bickering over macroeconomic policy issues. This then sends conflicting signals to potential investors,” said Lemani.
Stangroom said: “The dismal results of the IPO aside, the GetBucks IPO may be a very astute long-term plan by GetBucks to use the platform for strategic advantage in the future” in anticipation of an economic recovery in the country.
Market capitalisation on the ZSE declined by about 30 percent in 2015, starting off at $4.37bn in January and closing the year at $3.1bn.
According to data released by the bourse last week, the total value of shares traded during the year dropped from $453m in 2014 to $228.6m, with the value of shares traded by foreign investors falling to $125m. There were no trades in GetBucks after its listing on Friday.
It was bid at 3.5 cents and offered at 3.42 cents, with a subscription price of 3.42 cents.