BY SHAME MAKOSHORI
PAN-African seed breeder, Seed Co Limited makes a return to the Zimbabwe Stock Exchange (ZSE) tomorrow, about eight months after terminating trading to pursue a Victoria Falls Stock Exchange (VFEX) listing.
Under the deal, Seed Co was swallowed up by its Botswana Stock Exchange listed offspring, Seed Co International Limited (SCIL).
The combined assets of the seed empire would then switch to the forex denominated VFEX, where SCIL became the first to list when it opened in October last year.
But it emerged last week that the Reserve Bank of Zimbabwe (RBZ) had turned down the proposal.
In a market update released Friday, the ZSE said following the collapse of the deal, Seed Co would revert to the ZSE.
“The ZSE hereby notifies the investing public of the resumption in trading of Seed Co Limited shares on the ZSE trading platform with effect from Monday 21 June 2021,” ZSE chief executive officer Justin Bgoni said.
“Following an offer to Seed Co shareholders by SCIL to acquire the entire issued shares in Seed Co in exchange for new issued shares in SCIL, Seed Co applied for voluntary termination of its listing on ZSE pursuant to section 11 of the ZSE listing requirements. ZSE noted that Seed Co no longer met the minimum free-float for a listed company defined in section 87(d) of the ZSE’s listings requirements since SICL had acquired circa 95% of Seed Co and was now pursuing drag-along provisions.
“However, SICL could not fulfil one of the conditions precedent to the completion of the transaction; the RBZ exchange control approval.”
“Resultantly, Seed Co has withdrawn the application for delisting and will revert to the status quo as the contemplated transaction has been abandoned for the reason stated above.
“The ZSE sought and was granted permission by the Securities and Exchange Commission of Zimbabwe to resume trading in the shares of Seed Co. Trading in Seed Co Limited shares on the ZSE will resume with effect from 21 June 2021,” Bgoni added.
Seed Co group directors were confident that a VFEX listing would give impetus to the firm’s growth ambitions because the new bourse trades in forex.
But the transaction had raised the concern from Imara, one of Zimbabwe’s biggest advisory firms, which said it placed domestic investors at a disadvantage.
“We do not support that proposal as it would result in Seed Co Zimbabwe delisting from the ZSE,” Imara said.
“For domestic investors based in Zimbabwe it will, therefore, not be possible to invest ZWL (Zimbabwe dollar) savings into the Seed Co group again; SCIL shares can only be bought in Botswana pula or on the VFEX for US dollars.
“Under current exchange control regulations it will be onerous if not impossible for Zimbabwe pension funds and private individuals with no access to foreign exchange to do so.
“In our view this is a great shame.
“For existing domestic shareholders in Seed Co Zim, they would still have ownership of Seed Co Zim via SCIZ but they would most likely never be able to acquire more shares in the group again.”
The advisory firm added: “It makes perfect sense for Limagrain, the major shareholder (in Seed Co).
“They have access to international capital and have no exchange control issues.
“Should SeedCo Zimbabwe be delisted and wholly acquired by SCIL, we would not be surprised to see Limagrain buying out the minorities of SCIL in the future, thereby denying African investors with the opportunity to own such a successful company.”