HomeBusiness DigestRedstar listing still on cards

Redstar listing still on cards

Roadwin Chirara

DIVERSIFIED group, ZSR Corporation, is still pushing plans for a separate listing of its Redstar Wholesalers division.

, Helvetica, sans-serif”>The ZSR is said to have set the second half of the financial year for the proposed listing of the wholesale division.

Redstar currently operates as a stand-alone subsidiary of ZSR.

ZSR’s listing plans will result in the shareholding of the wholesale business being diluted in accordance with the rules governing initial public offers (IPO) on the Zimbabwe Stock Exchange.

The operations of Redstar were merged with those of Advance Wholesalers, which the ZSR acquired in 2003 as part of its expansion programme.

Redstar, which currently operates over 38 branches countrywide, will join the trend by listed entities to unbundle operations as part of efforts to increase value to their shareholders.

The fate of the proposed listing will mainly depend on factors which include the performance of the stock market during the period of its listing.

“This listing is, however, subject to various approvals and changes in stock market conditions,” said Aldo Musemburi, ZSR company secretary, in a cautionary statement issued on Monday.

He said the listing was likely to impact on the performance of ZSR’s share price.

“This listing may influence the share price and accordingly, shareholders are advised to exercise caution in their dealings,” Musemburi said.

The ZSR is said to be concerned about the performance of the share price of its wholesale business if listed, after the stock market took a tumble following the monetary policy review statement last month.

Analysts said the ZSR was likely to continue monitoring the performance of the industrial index and the retail sector for the benefit of its business and shareholders.

“No company wants to list when market conditions are not conducive for its type of business and as a company ZSR is likely to continue monitoring the market before going for the IPO,” said an analyst.

The proposed demerger by ZSR follows the example of Astra Holdings which successfully listed its operating units Cairns Holdings, Tractive Power and Astra Industries to unlock value for its shareholders.

The ZSR Corporation owns Polyfilm Plastics, Country Choice Foods, Blue Star Transport, Highfield Bag, Arther Garden Engineering and Marathon Retreads, among others. Its major external interest is the Zambian subsidiary, Kabwe Industrial Fabrics.

The company recorded a profit of $6,3 billion from its operations while its investment totalling $2,5 billion in National Discount House was converted into equity.

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