THE government and the Zimbabwe Stock Exchange (ZSE) have signed a Memorandum of Understanding (MoU) for the transformation of the bourse into a publicly traded firm.
Stockbrokers and government would in the interim own 68% and 32% respectively. The shareholdings would be halved to 34% and 16% respectively to attract new investors.
Before yesterday’s announcement, ZSE was being run as a mutual society whose fate was determined by members of the exchange thereby creating conflict of interest in which stockbrokers could not separate their interests as shareholders, managers and participants on the stock exchange.
Speaking at the signing ceremony for the demutualisation of ZSE in Harare yesterday, Finance and Economic Development minister Patrick Chinamasa said the government acknowledges that the initiative to establish the exchange was market-driven mainly through stockbroker contribution in the form of proprietary rights and as such the exchange was jointly owned by the government and members of the exchange.
Chinamasa said post demutualisation, the government and stockbrokers were expected to reduce their shareholding to have a diversified shareholding structure.
The remaining 50% shareholding would be shared among private financial institutions and individuals.
“In this regard, ZSE will court strategic partners, but no holder of voting shares in ZSE shall hold more than 10% of the total voting in ZSE. The technical partners are expected to add value through technical expertise and know-how, technology transfer, strategic alliances and the like,” Chinamasa said.
Chinamasa said the exchange would be transformed from its current not-for-profit status to a profit-making corporate organisation.
“The primary objective of the project is to transform the ZSE from its current state into a viable public limited company. The transformation would ultimately pave the way for the listing exchange,” Chinamasa said.
He said the subsequent listing of the exchange would result in the positive developments which are improved governance and operational efficiency, removal of barriers to entry for market participation, investor participation in the running of the exchange, improved access to resources for capital investments and growth and increased capacity to attract international investors among many others.
He, however, said with the current Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset) economic blueprint, the ZSE provides the perfect avenue to mobilise both local and foreign resources.
“It is envisaged that a well-capitalised ZSE will be able to re-introduce an active bond market and introduce other investment avenues such as real estate investment trusts which would be used to supply the much-needed developmental capital that would make ZimAsset a reality,” he said.
He added that there was also opportunity to promote indigenisation through ZSE.
Listing on the ZSE will ensure that the shares acquired by ZimAsset envisaged Sovereign Wealth Fund and various indigenous Zimbabweans have a determinable value and can be used as collateral.