First Mutual Properties Limited (FMP) has revealed that tax considerations influenced its decision to delist from the Zimbabwe Stock Exchange (ZSE), arguing that a post-delisting structure would offer greater operational and financial flexibility.
The company says moving to private ownership will allow it to optimise capital raising, reduce listing-related costs, and improve tax efficiency through more flexible structuring of investments and financing arrangements, including the use of special purpose vehicles and other bespoke funding mechanisms.
In a circular to shareholders earlier this week, FMP proposed delisting from the ZSE, with its majority shareholder, First Mutual Holdings Limited (FMHL), expected to buy out minority shareholders to assume 100% ownership. The proposal requires shareholder approval at an extraordinary general meeting scheduled for June 2.
Explaining the decision, FMP cited tax considerations among the key drivers.
“As a private entity, the company will be able to execute corporate actions such as rights issues and internal restructurings more efficiently,” FMP said.
“Greater structuring and tax planning latitude, including the use of special purpose vehicles and income-oriented structures, will support more efficient capital allocation.”
The company said private ownership would also provide flexibility in raising capital through private placements, asset-level funding, development joint ventures, and other bespoke financing structures better aligned with project timelines and risk profiles.
“The company will also benefit from the elimination of ongoing listing fees, allowing those resources to be redeployed toward value-enhancing initiatives,” it said.
- Why FMP is delisting from ZSE
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The tax burden was further highlighted in findings from independent financial adviser Intellego Investment Consultants (Private) Limited.
“FMP operates as a taxed real estate operating company. Unlike the four Zimbabwean-listed REITs (Tigere, Revitus, Eagle, and Pfuma), FMP is not entitled to the income tax exemption and mandatory 80% distributable income requirement applicable to REITs under Zimbabwean legislation,” Intellego said in a letter dated April 28, 2026.
“The resulting deferred tax liability of US$17 118 906 is a permanent structural encumbrance on FMP’s equity value that will not be relieved by delisting and will persist for as long as the underlying properties remain unrealised.”
Intellego added that this structural disadvantage explains the persistent discount to net asset value (NAV) at which FMP has traded, as well as the pricing of the buyout offer.
The deferred tax liability relates to taxes that would become payable if FMP disposed of its properties at a profit. Since the company operates as a taxed real estate operating company rather than a REIT, the liability remains embedded in its balance sheet and continues to weigh on equity value.
Consequently, Intellego said this has contributed to FMP consistently trading below NAV, reinforcing the rationale for delisting. FMP recorded investment properties worth US$136,07 million as of end-2025.
