Bridgefort Capital shifts focus to VFEX

BRIDGEFORT Capital Limited, formerly MedTech Holdings, has hinted at plans to migrate from the Zimbabwe Stock Exchange (ZSE) to the Victoria Falls Stock Exchange (VFEX) citing the increasing dollarisation of the economy.

The diversified firm said in its recently issued 2022 Annual Report that shareholders of targeted investee companies are reluctant to conclude transactions for ZWL-listed shares.

It noted that while it continues to pursue transactions to broaden its investment portfolio, the now dominant preference for share trading in US dollars instead of the local currency was affecting its operations as most of its deals are hampered.

“The shareholders of targeted investee companies are reluctant to conclude transactions for ZWL listed shares hence we envisage having to move the listings to the VFEX at the time we manage to conclude a transaction,” chief executive officer, Mr Vernon Lapham said.

“We aim to conclude the transfer of the Sunway land to the Arch Properties Trust this year whilst also doing designs and obtaining planning permission for this property and the Pomona property mentioned above.

“We will then move to the construction phase while raising funds for this construction along the way.”
The USD-denominated VFEX is a subsidiary of the ZSE launched in 2020 as an off-shore-biased financial services centre.

The move is part of Zimbabwe’s efforts to attract global capital and restore foreign investor confidence in the country’s capital markets while helping companies to raise capital in foreign currency.

Bridgefort Capital Limited, which is listed on the ZSE and trades in local currency, said raising capital in inflationary times is risky for businesses due to the length of time of the processes involved and loss of real value through inflation during this timeframe.

“Acquisitions will be largely, if not entirely, settled in shares under the current inflationary environment although vendors may find this unattractive thereby limiting the acquisitive growth of the company.

“The company is considering the possibility of listing one or more classes of shares on the Victoria Falls Stock Exchange simultaneously with the conclusion of a transaction,” it said.

During the period under review, the report indicates that the company made a profit after tax of $568 million. The business incurred a significant foreign exchange loss of $586 million relating to legacy creditors and credit extended by foreign suppliers – which is hedged with stock.

“Sales volumes decreased by 23 percent for the year made up of a volume increase in the first six months of 24 percent and then a huge decline of 48 percent in the second half.

Turnover increased to $4,26 billion as compared to 2021 turnover of $3,28 billion – an increase of 30 percent,” said the company.

It said it also experienced some level of stockouts due to the unaffordability of borrowings and a resultant reduction in working capital as borrowings were deliberately limited.

“Several customers were also on stop supply due to overdue payments at various stages. Sales to supermarkets and wholesalers continue to be subdued.

During the year under review, payments were received from the Reserve Bank for legacy debts of R3 million, which provided some much-needed relief for the company and their suppliers,” it said.

“The remaining balance owed by RBZ for legacy debts is now US$681,232 with nothing having been paid since year-end.”