RETAIL enterprise Axia Corporation Limited has revealed its intention to migrate from the Zimbabwe Stock Exchange (ZSE) to the Victoria Falls Exchange (VFEX) due to the favourable financial terms offered on the VFEX.
This follows the meeting held last year in November in which the board of directors passed a resolution terminating AXIA’s ZSE listing with the intent of listing its shares on the foreign currency-indexed bourse.
Group chairperson Luke Ngwerume said the proposal was made to preserve and grow shareholder value.
“To drive the impetus for growth in Zimbabwe and in the region as well as to protect and increase shareholder value, your board has proposed to move the group company’s share capital from the ZSE to the VFEX,” he said.
The benefits included the low trading costs of 2.12% compared to 4.63% on the ZSE, which would enable the company to make savings and retain more value for the shareholders.
The company is migrating to gain US dollar capital to assist Axia in its capital expenditure, working capital requirements and regional expansion initiatives, which is line with what the company wants to focus on this year.
“In the 2023 financial year, the group will focus on the execution and completion of the bedding and lounge suite production facilities, the opening of new retail stores and the optimisation of major distribution agencies in Zimbabwe and the region,” said Ngwerume.
Ngwarume said the move would improve the company regional profile and commercial standing while strengthening its prospects of both local and regional expansion.
“The listing on the VFEX we believe would create an enhanced pathway to the participation of regional and international investors while enabling further penetration of more regional markets,” he added.
The US dollar valuation of Axia would also allow shareholders to realise the value of their holdings and provide a more accurate benchmark of the stock’s performance while mitigating valuation volatility.
Advantages which come with listing on the VFEX bourse include favourable tax incentives for investors of zero capital gains, a 5% withholding tax for foreign investors to enhance shareholder returns and free repatriation of dividends with proceeds from the disposal of shares through offshore settlement for foreign shareholders.
If the company lists on the VFEX, financial reporting would be more efficient through US dollar-denominated group financial statements. This would contribute to a lower risk perception for Axia, increasing the company’s advantage to access other forms of finance at favourable terms.
Axia Corporation Limited operates within the specialty retail and distribution sector, with three operating business units, namely furniture and electronic appliance retailer TV Sales & Home, Transerv and Distribution Group Africa.
Axia’s delisting on the ZSE would bring to three the number of VFEX counters. At the end of last year, Simbisa Brands migrated to VFEX from ZSE and National Foods Limited also announced its exit.