ONE of Zimbabwe’s biggest property developers, West Property (WestProp) announced last week that it will list on Victoria Falls Stock Exchange (VFEX) at the end of this month. Following the announcement, our senior business reporter, Tatira Zwinoira (TZ), caught up with WestProp chief executive officer, Kenneth Sharpe (KS) to discuss more details about the plan. Below are excerpts of the interview…
TZ: Why did you prefer listing on VFEX, instead of the Zimbabwe Stock Exchange (ZSE)?
KS: The ZSE was not the right market for us because it is a Zimbabwe dollar market. We didn't want our investors to be locked into those dollars. VFEX was very attractive to us because it is dollarised. The US dollar is a stable currency. Investors know that they can invest US dollars and get them back. The exchange gives special incentives. It offers zero capital gains tax. The ZSE’s capital gains tax is quite high. VFEX allows us as a company holding investor funds to hold them offshore. If you want to bring the funds onshore you can keep them in your nostro account. They are not subject to the 25% liquidation (charge). Therefore, investors are protected. That is the reason why we want to list on VFEX. In addition, our business is fundamentally a US dollar business. We believe listing on a US dollar exchange makes much more sense. We want to drive value and savings in US dollars. We wouldn't be able to do that on the ZSE. We are not only the first property company to list on VFEX. We also the first company to ever offer preferential shares in Zimbabwe. We are also the first initial public offering (IPO) since 2014.
TZ: How different is WestProp from property firms listed on ZSE?
KS: We are different in our model. Property firms listed on ZSE (have) mature properties, which have been around for a long time. They are looking at high vacancies, they are looking at office rentals, they are looking at the macro environment much more. We are more forward thinking, more progressive, more innovative. We are developing and selling. Our model is not so much leasing and getting a yield but developing and making a development profit.
TZ: Could you explain what you are doing in simpler terms?
KS: Every parent wants to do more for their children than they had. Most Zimbabweans (grew up poor). I had nothing when I was born. The house that my father had was a grass hut. Look at where I am today. I think it is about saving money and broad-based empowerment. We are offering these preferential shares, and making it affordable because we want individuals to feel that they are part of this journey with us - the journey of a billion bricks. When we build the Mall of Zimbabwe, we don't want to just say it's our mall and we own 100% of it. We want to say this is owned by the people of Zimbabwe. So, (small investors), your US$50 is going to help build Zimbabwe. That is the message I am delivering. While you invest, we are guaranteeing it because we have land that underpins your investment. It is not like investing into a scheme where there are no assets. We have assets that back that investment. When we build on the land with that US$50, it increases the value of the property, which increases the value of your shares. After five years, if you decide we have done well enough, we have paid your dividends…you can convert to become an ordinary shareholder and join us for the permanent journey of being together.
TZ: Who is the underwriter?
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KS: It is Alpha Holdings, a Mauritian company. They decided to underwrite 10% of the shares, which is a requirement on the exchange. That is about US$3 million.
TZ: How did you get in touch with them?
KS: That's the majority shareholder, So, the shareholder was confident enough.
TZ: They own majority shares in WestProp?
KS: Yes.
TZ: I thought it was yours?
KS: Before, when it was a private company, it was 100% (owned by) Alpha Holdings. Then, when they listed, Alpha Holdings had to reduce shareholding to 70% to allow the public to participate.
TZ: Okay, so it's 30% of their shares which are to be publicly listed?
KS: Correct.
TZ: You have had a lot of court cases
KS: Yes.
TZ: Can you give me an update on those cases?
KS: If I go back to when the cases started 10 years ago with government, I think at one stage, we had 52 or 54 cases. Today, I am glad to say that we have not lost one and we are down to six cases. I think we have been to the Supreme Court almost 10 times. And we have had victory on all of them. Unfortunately, the last remaining cases is really the kicks of a dying horse. It's just, let's say, frivolous and vexatious court cases that relate to some old transaction that was done in the business. And we don't have any, in our view, risk in any of those cases. They are basically at the finishing stage and we have issued in the prospectus a legal report that explains them in detail.
