Zimbabwe's Edgars Stores eyes listing on foreign currency-only VFEX

AFRICAN STOCKS AND FINANCEFebruary 17, 2024 at 1:46 PM UTC

TLDR

Edgars Stores Limited to delist from Zimbabwe Stock Exchange (ZSE) and join Victoria Falls Stock Exchange (VFEX) for foreign currency benefits.
Edgars becomes first company to list on VFEX in 2024, pending shareholder approval and regulatory authorizations.
Chipo Mafunga, company secretary, confirms plans for delisting from ZSE and listing on VFEX once regulatory processes are completed.

Edgar’s Stores Limited, a prominent clothing store retailer operating under the CHAIN brand, has announced its decision to delist from the Zimbabwe Stock Exchange (ZSE) and instead join the Victoria Falls Stock Exchange (VFEX). The move is driven by the incentives offered by the foreign currency-only VFEX.

This transition positions Edgars as the first company to list on the VFEX in 2024. In a cautionary statement issued recently, Edgars indicated that further details of the transaction would be communicated to shareholders once all regulatory processes are finalized.

Chipo Mafunga, the company secretary, stated, "The directors of Edgars Stores Limited wish to advise all shareholders and the investing public that the board, subject to shareholder approval and the granting of all necessary regulatory authorizations, has approved the delisting of the company from the ZSE, immediately followed by its listing on the VFEX."

Key Takeaways

The decision to delist Edgars from the ZSE aligns with the company's ongoing efforts to implement turnaround strategies aimed at sustaining profitability amidst challenges such as the depreciation of the local currency and increased competition from cheap imported second-hand clothing. VFEX, being a foreign currency-only exchange, offers advantages such as currency protection and improved US dollar liquidity, as highlighted by financial services firm IH Securities. Additionally, VFEX provides some hard currency dividend yield, albeit with limited capital gains potential. Notably, several prominent companies, including blue-chip entities like Innscor Africa Limited, Axia Corporation Limited, African Sun Limited, Zimplow Holdings Limited, First Capital Bank, and WestProp Holdings Limited, opted to list on the VFEX last year. However, despite the overall increase of $1.32 billion in the ZSE's market capitalization year to date, driven by the depreciation of the local currency, Edgars' decision to delist indicates its focus on leveraging the incentives and opportunities offered by the VFEX for its future growth and sustainability.

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