Shareholders of GetBucks Microfinance Bank Limited have given their approval for the financial institution to voluntarily delist from the Zimbabwe Stock Exchange (ZSE). This comes as the bank cited the continued listing as an unsustainable burden. Shareholders approved the decision to delist from ZSE at the bank’s sixth Annual General Meeting on August 31, 2023.
GetBucks initially indicated plans to migrate from the ZSE to the US dollar-denominated Victoria Falls Stock Exchange (VFEX), but later resolved to just exit the ZSE and remain unlisted.
Explaining the reasons behind the delisting, company secretary Muchineripi Chigwendere said in a recent circular that the board of directors convened a meeting on December 9, 2022, where they seriously considered the termination of Getbucks ZSE listing.
The board’s collective assessment was that, given the current economic environment in Zimbabwe, the benefits of maintaining a listing on the stock exchange were diminishing while the associated costs remained significant.
Mr Chigwendere emphasized that: “Trading of the GetBucks Bank shares has not represented a realistic valuation: as at the Last Practicable Date the Company was trading at $38,50 (thirty-eight dollars and fifty cents in Zimbabwe dollars) per share which represents a market capitalisation of $44,8 billion or twenty-nine (29) times the value of shareholders’ equity in the business as at 31 December 2022, a valuation that makes equity capital raising initiatives difficult.”
The circular further stated that the inability to secure capital from institutional investors had rendered the stock exchange listing less valuable as a mechanism for raising capital.
Consequently, in light of the challenging trading conditions, the board decided to propose to the shareholders the idea of delisting from the ZSE.
GetBucks Microfinance Bank also expressed concerns regarding the fees and levies imposed by the ZSE, which are calculated based on market capitalisation, and have become an onerous expense for the institution as this attracted more levies and compliance costs.
It’s worth noting that the microfinance bank has been actively engaged in negotiations for a US$5 million recapitalization package.
This infusion of funds is seen as essential to meet the minimum capital threshold mandated by the Reserve Bank of Zimbabwe (RBZ).
The central bank revealed in the 2022 Monetary Policy Statement that the bank was yet to be compliant with the minimum capital requirements. But as of February this year, the bank was still undercapitalised.
According to an article dated August 28, 2023 by financial analyst Rufaro Hozheri, the bank’s shareholder mix shows that 99,97 percent is owned by the top 20 shareholders. Additionally, the counter has been “highly illiquid with only 0,006 percent of the shares traded on an annual basis.”