Old Mutual, PPC increase fungibility limits

HARARE - The Reserve Bank of Zimbabwe (RBZ) has given Old Mutual and PPC the green light to increase fungibility of their shares from 40 percent to 49 percent.

Fungibility implies that two things are identical in specification, where individual units of the commodity or good can be mutually substituted.

In this case, local shareholders are allowed to trade their shares in all other markets the two counters were registered.

Old Mutual, the only fully fungible counter on the Zimbabwe Stock Exchange(ZSE), is primarily listed on the London Stock Exchange(LSE) and has secondary listings on the Johannesburg Stock Exchange (JSE) and Namibia Stock Exchange.

PPC has a primary listing on the JSE and a secondary listing on the ZSE.

ZSE chief executive Alban Chirume yesterday said applications for removal of shares from local registration were open from today.

“Approvals for removals will be granted pursuant to the application meeting all the Exchange Control Requirements and on a first come first served basis,” he said.

The ZSE offers partial and full fungibility to counters on the bourse, with full applying to companies whose primary listing is in Zimbabwe.

Under this provision, the central bank through its Exchange Control Department prescribes the minimum number of shares that should be maintained on the Zimbabwean share register at all times.

In partial fungibility, foreign investors are allowed to buy a fungible portion of shares in the company and transfer them to a secondary listing market’s share register.

Where the primary listing is not in Zimbabwe, shares can only be moved to the Zimbabwean register.

Subject to exchange control approval from the RBZ, shares can be moved from the local register to a foreign investor where the transfer relates to capital-raising activities.

Other counters that are partially fungible on the ZSE are cables manufacturer, Cafca Limited, primarily listed on the JSE with secondary listings on the LSE and ZSE and miner, Falcon Gold, which has a primary listing on the JSE and secondarily listed on the Luxembourg Stock Exchange and ZSE.

Hotel group Meikles Limited has three percent fungible issued share capital with a primary listing on the LSE and secondary on ZSE, financial services group NMBZ Holdings Limited is in the same bracket, but has zero fungible issued share capital.

Hwange Colliery Company, primarily listed on the ZSE is also on the JSE and LSE but does not have any fungible issued share capital

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