Crunch talks over Old Mutual, PPC

…as Zim government sticks to its guns

EXTENSIVE behind the scenes talks over how to draft back bellwether counters suspended from the Zimbabwe Stock Exchange (ZSE) two years ago continued in the past few weeks, officials confirmed, as sources cast doubts over re-listing prospects.

Johannesburg Securities Exchange (JSE) listed Old Mutual Limited and cement maker PPC, were suspended from the ZSE in 2020.

They were suspended together with seed technology outfit, Seed Co International, which agreed to government’s request for them to migrate to Victoria Falls Stock Exchange (VFEX), which began trading in October 2020.

The three fungible counters faced a litany of accusations from the ruling Zanu PF party, which accused them of abating a long running economic crisis through the stock exchange.

But two years on, PPC and Old Mutual have not migrated to the waterfall, with insiders telling businessdigest Old Mutual had taken a different view over its participation in Zimbabwe’s capital markets.

Old Mutual still participates on the ZSE through its exchange traded fund (ETF), which was listed last year.

The firm is said to be working on a Real Estate Investment Trust (REIT), which would also be listed.

Their suspension triggered valuation problems, which ended with the Securities and Exchange Commission of Zimbabwe allowing market intermediaries to use closing prices on the JSE at the prevailing official auction exchange rates for valuation purposes.

The share valuation is material to the fees earned by fund managers as well as the asset base of companies holding these stocks.

Authorities confirmed this week that they were ceased with the matter.

Government said it still held its position that Old Mutual and PPC migrate to VFEX, which has struggled to attract listings.

In contrast, the ZSE has had a fine start to the year.

“Our preference is that they move to the VFEX,” permanent secretary at the Ministry of Finance and Economic Development George Guvamatanga said.

“We have proposals which are still confidential, but we prefer VFEX.”

ZSE and VFEX CEO Justin Bgoni said negotiations were ongoing with various models under consideration.

“There are various models being looked at,” he said.

“We never stopped talking but I can’t give you the models. There has been channelling going on, the ministry, us, and all parties involved.”

Contacted for comment, Old Mutual said engagements with the Zimbabwean government over the suspension were ongoing.

The firm said an update would be made once agreements were reached.

“We are aware of the hardship that the suspension is causing our shareholders. It is a complex environment, and we continue to engage the Zimbabwean government on this matter,” Old Mutual said in emailed responses.

“We will update stakeholders on the outcome of the engagements as soon as we are in a position to do so. We remain fully committed to Zimbabwe, its economy, and the people we serve.”

PPC had not responded to businessdigest’s questions at the time of going to print.