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Nqobile Bhebhe, Senior Business Reporter
RETAIL and specialty distribution group, Axia Corporation Limited chairman, Mr Luke Ngwerume has said the listing on the Victoria Falls Stock Exchange (VFEX) would create an enhanced pathway for further penetration of more regional markets.
In addition to that, the proposed listing on dollar-denominated bourse will increase the group’s ability to raise capital in foreign currency to support its currency requirements.
In a circular to shareholders, Mr Ngwerume said despite operational hurdles encountered last year, the group, maintains a positive long-term view and continues to seek opportunities to preserve and grow shareholder value.
“In the 2023 financial year, the group will focus on the execution and completion of the bedding and lounge suite production facilities, the opening of new retail stores and the optimisation of major distribution agencies in Zimbabwe and the region,” he said.
“To drive the impetus for growth in Zimbabwe and in the region as well as to protect and increase shareholder value, your board has proposed to move the group company’s share capital from the ZSE to the VFEX.”
Mr Ngwerume said the listing on the VFEX would create an enhanced pathway to the participation of regional and international investors while enabling further penetration of more regional markets.
He noted that among the advantages for the proposed listing on VFEX include free repatriation of dividends and proceeds from the disposal of shares through offshore settlement.
Other advantages include favourable tax incentives for investors of zero capital gains tax and a five percent withholding tax for foreign investors to enhance shareholder returns.
“A US dollar valuation of Axia allows shareholders to realise the true value of their holdings. Lower trading costs of 2,12 percent compared to 4,63 percent on the ZSE. Based on the above, your board recommends that Axia Corporation Limited migrates listing from the ZSE to the VFEX, he noted.
VFEX is a subsidiary of the Zimbabwe Stock Exchange (ZSE), launched in 2020 as part of efforts to attract global capital and restore foreign investor confidence in Zimbabwe’s capital markets and help companies raise capital in foreign currency
The establishment of the VFEX is one of the many initiatives implemented by the Second Republic to stabilise the economy and attract foreign direct investment.
Investors who participate on the VFEX benefit from the ability to move their capital and dividends in and out freely, low transaction costs, tax incentives that include five percent dividend withholding tax for foreign investors and exemption from capital gains withholding tax for all investors and minimal currency risks.
Several firms have recently announced intentions of listing and some have started trading.
Axia Corporation Limited operates within the specialty retail and distribution sector and has three operating business units, namely TV Sales & Home (TVSH), Transerve and Distribution Group Africa (DGA).
TVSH is a leading furniture and electronic appliance retailer with sites located countrywide while Transerve retails in automotive spares.
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