Govt, ZSE stakeholders sign MoU

HARARE - Government has signed a Memorandum of Understanding (MoU) with the Zimbabwe Stock Exchange (ZSE)’s stakeholders as part of steps to demutualise the bourse.

The demutualisation — on the cards for several years, with numerous deadlines missed due to funding challenges — is a process where the exchange will be transformed from mutual institution into a publicly traded firm.

Government wants the bourse to be changed from being a member-owned organisation into a company with shareholders and directors to improve on corporate governance.

Upon signing the agreement, Finance minister Patrick Chinamasa said “the ZSE provides the perfect avenue to mobilise both local and foreign resources.

“It is envisaged that a well-capitalised ZSE will be able to introduce an active bond market and other investment avenues such as Real Estate Investment Trusts (Reits) which would be used to supply the much needed developmental capital that would make ZimAsset a reality,” he said.

It is also hoped that if demutualised, the value of shares on the bourse would improve.

Chinamasa noted that demutualisation of the local bourse present an opportunity to promote indigenisation through the ZSE.

“Listing on the ZSE will ensure that the shares acquired by the ZimAsset envisaged sovereign wealth Fund and various indigenous Zimbabweans have a determinable value and can be used as collateral,” he said.

The Treasury boss said it was important for Zimbabwean businesses to list on the stock exchange to begin to enjoy value.

“This will make the shares more acceptable as collateral by banks and introduce a second level of liquidity into the Zimbabwean economy,” he said.

According to the agreement, the government and stockbrokers will have a 40:60 goodwill equity structure pre-demutualisation based on a valuation of $5 million.

It hoped that after the demutualisation, stockbrokers will own 34 percent of the exchange and government 16 percent.

A further $5 million will be raised through initial public offering (at $3 million) for a 30 percent stake and $2 million for private placement for a 20 percent shareholding.

“The intention is to have a diversified shareholding structure since the exchange is such an important institution whose shareholding cannot be vested in a few stakeholders.

The remaining 50 percent will be shared among private financial institutions and individuals,” said Chinamasa.

The ZSE was formed in 1945 by a group of stockbrokers and businessmen in Bulawayo who put up capital in return for shares in the bourse.

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