If passed, the apparel retailer’s shares would cease trading on the Zimbabwe Stock Exchange (ZSE) on March 27.
The move, announced in February, reflects the company’s pursuit of hard-currency capital, which it believes will be more accessible on the US dollar-denominated VFEX.
Edgars hopes the exchange’s potential growth, improved investor pool, and reporting mandate in US dollars will reduce its risk profile and enhance financing access.
“The potential development of the VFEX into a regional exchange strengthens Edgars’ position of attracting a more extensive investor base, aiding the company in its endeavors for domestic and regional expansion,” Edgars said in a circular.
The VFEX also offers tax benefits, including a lower dividend withholding tax for foreign investors and no capital gains tax, improving shareholder returns versus the ZSE.
Edgars further anticipates less valuation volatility and better performance benchmarks.
If approved, Edgars would be the VFEX’s 15th listing and 12th company migrating from the ZSE.
The trend reflects difficulty raising capital on the ZSE amid a US dollar-denominated environment.
Zimplow Holdings, a recent ZSE emigrant, cited a desire for “quality international investment” in its VFEX listing.
Chairman Godfrey Manhambara, commented, “The group seeks to harness offshore settlement options on the VFEX, thereby enabling investors to repatriate their dividends in a seamless manner, whilst effectively managing the foreign currency risk that is inherent in holding shares as a foreign investor.”
Edgars’ shift also underscores a wider movement toward US dollar accounting, with a several issuers on the ZSE now posting US dollar-denominated financials.
“This [US dollar-reporting] facilitates a more effective assessment of the company’s performance compared to the Zimdollar, which foreign investors may find challenging to fully comprehend due to its volatility.
“Additionally, VFEX-listed firms are obligated to adhere to specific governance and reporting standards, contributing to enhanced overall management and company performance.”
newsdesk@fingaz.co.zw
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