ZIMBABWE Stock Exchange-listed Fidelity Life Assurance’s bid to raise $5 million through a bond has been oversubscribed with interest from investors totalling more than $10 million in a boost for the company’s housing project.
NDAMU SANDU
This has prompted the company to seek approval from the regulator to be able to raise twice the amount the group was seeking, according to people familiar with the matter.
“The bond was oversubscribed. We have applied for regulatory approval to increase the bond to $10 million and are hopeful that it [approval] would be given any time soon,” a source said.
The bond has three-year tenure at a rate of 10% per annum. It has a prescribed asset status, meaning that it can be traded.
Early this year, Fidelity went to the market to raise $5 million to finance its South View housing project along the Harare-Masvingo Highway.
The housing scheme was launched last year on a 323-hectare piece of land.
The money raised from the bond would be used to fund the installation of the 11km water pipe at a cost of $2,675 million and an elevated water tank with a capacity of 15 million litres at a budget of $2,325 million, a City of Harare precondition.
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The new suburb is also set to have a police station, six primary schools, two secondary schools, six crèches, 14 flats, two commercial stands, an open space and five churches.
South View Park, according to the company, is Harare’s first low-cost housing project in the country since 2000. Fidelity first embarked on housing development projects in 2011 and developed 317 stands in phase one of Manresa Fidelity Park in Arcturus.
In his maiden monetary policy last week, Reserve Bank of Zimbabwe governor John Mangudya removed restrictions on foreign investors interested in participating in the bond market. He said investors would buy up to 100%.
“In order to encourage foreign investment inflows and further develop the country’s bond market, exchange control restrictions on the level of foreign participation on primary issuance of bonds and participation by foreign investors in the secondary market are removed, with immediate effect,” Mangudya said.
Before the announcement, foreign investors were allowed to subscribe for up to 35% of primary issues of bonds provided the purchase was financed by inward transfer of foreign currency through normal banking channels.
