Listing by way of introduction allows LonZim and Niloticus shares to be listed and trade on the bourse without raising capital through an Initial Public Offer (IPO).
Sources close to the developments told businessdigest that the two companies intend to join 76 other listed entities trading on the local bourse by end of the third quarter.
It is understood that LonZim through its sponsoring broker, Lynton-Edwards Stockbrokers, has engaged the ZSE with a view to going public.
LonZim has diversified business interests in Zimbabwe in sectors that include communications through Celsy’s, tourism, accommodation, infrastructure, transport, commercial and residential property and technology.
“The company is expecting to start trading on the local exchange by the end of the third quarter. They have reportedly met most of the listing requirements and management wants to list by way of introduction,” a source privy to the developments said.
“They have, however, expressed concern over the listing requirements saying conditions on the AIM are more relaxed than those on the ZSE.”
When reached for comment on the proposed listings, ZSE CEO Emmanuel Munyukwi said discussions on the possible new listing were at “preliminary stages,” without elaborating.
“We are still in the preliminary stage of these discussions and nothing has been finalised. They have approached us with an intention to do a secondary listing on the ZSE,” Munyukwi said.
Asked whether the local bourse, like other international exchanges, makes it mandatory for companies that list on the ZSE by introduction to conduct an IPO, he said: “No, there is no such regulation because we feel that there is no need for that as the whole purpose of an IPO is to raise funds. But in this form of listing, the company is not seeking any fresh capital.”
Manila-based Philippines Stock Exchange, for instance, compels companies that go public by way of introduction to float shares within 12 months from its listing date.
Meanwhile, LonZim says it has adopted a wait-and-see approach in its growth strategy in Zimbabwe.
“The company’s investment strategy is dependent on future radical improvement in the Zimbabwean economy, and it is therefore possible that a significant period of time may elapse before an investment by the company will produce any returns,” a statement on the LonZim information portal reads.
“In order to position itself for maximum gain from improvements in the Zimbabwean economy, the company may make initial investments in Zimbabwe. However, there is no guarantee that the economy in Zimbabwe will improve. Accordingly, the Company may not be able to make any profits and may incur losses. Furthermore, businesses in which the company has made an initial investment with a view to investing further once significant economic improvement occurs may deteriorate in the meantime.”
Niloticus has crocodile ranches in Victoria Falls and Kariba.
Niloticus is planning to cut crocodile output from 60 000 to 42 000 per year. Innscor says the move is in response to the world economic recession, which affected the global exotic skins market.
A total of 55 000 crocodile skins would, however, be processed during the current financial year before output is reduced to 42 000 animals annually. The operation culled 17 000 animals in the half year period to December 2009. For the half-year to December 2009, Niloticus operations recorded revenue of US$4,47 million. Profit before tax stood at US$1,92 million owing to reduced livestock levels and low prices.
Should the company pop the champagne to mark the maiden trade, this could be the second time within a year that the local exchange would have added new players to the capital market. Engineering company Zeco became the last company to conduct an IPO three years ago while financial services Interfin listed at a premium in July.