Chronicle Editor
Nqobile Bhebhe, Senior Business Reporter
FIRST Capital Bank Limited has outlined timelines for migrating to the Victoria Falls Stock Exchange (VFEX) as the Zimbabwe Stock Exchange (ZSE) has granted the financial institution authority to delist from the bourse.
The delisting is subject to conditions such as the bank shareholders passing resolutions of migrating by the requisite majority, at an emergency general meeting set for May 4.
Plans to shift to the US dollar-denominated bourse comes at a time when it is gaining rapid momentum having attracted more top performing companies, injected much-needed confidence and cementing the country as a safe investment destination.
The USD-denominated VFEX is a subsidiary of the ZSE launched in 2020 as an off-shore financial services center.
VFEX is the only exchange in Africa trading in the United States dollars and was established as a pioneer offshore financial services centre by the Government in 2020 to attract global investment.
In a circular to shareholders yesterday, the bank said it has scheduled its EGM on May 4, followed by publication of EGM results on May 8.
Last day of trading of First Capital Bank Shares on ZSE is set for May 12 and migration to VFEX is planned for May 17.
It noted that the estimated completion of First Capital’s VFEX listing is May 19.
Detailing the rationale of the proposed migration, the bank noted that it has seen a growth in its US dollar loan book and balances to over 70 percent, with foreign currency income contributions between 55 and 65 percent in recent months.
It added that it plans to roll out more foreign currency denominated products to boost its foreign currency revenue.
The bank said the potential increase in the US dollar earnings increases the shareholders’ expectation to receive their return in US dollar through US dollar dividends and US dollar capital gains on share disposal which the VFEX offers in comparison to the ZSE.
“The Bank provides corporate services and funding to companies in Zimbabwe that are exposed to USD denominated costs.
Improved access to USD facilities for the Bank through the VFEX enables the Bank to maintain a competitive position in the market by offering USD capital to such corporates.
“The Bank has mobilised lines of credit from regional and international partners that include the African Development Bank, Afreximbank, the European Investment Bank and the Trade and Development Bank.
“These facilities are expected to provide a boost to the economy through trade finance and medium-term capital opportunities which smoothen trade cycles and facilitate capital investment for long term projects.
“Access to foreign currency capital through the VFEX can attract more facilities of this nature and provide sustainability to the existing relationships,” reads part of the circular.
The bank further noted that the current reporting framework which is based on the local currency and upon which adjustment is made for hyperinflation has created substantial complexity in the reporting process and volatility in the reported numbers.
Therefore, by listing on VFEX, the Bank is required to report its financial performance in US dollar which is a stable currency that will assist current and potential investors to better understand the performance of the entity.
Another factor for migrating in on its market capitalisation.
“The USD implied valuation of First Capital Bank following its VFEX listing which mitigate valuation volatility and provides a more accurate reflection of the Bank’s market capitalisation. This will result in shareholders realising the true value of their holdings on disposal.”
Government has committed that the VFEX will remain a foreign exchange market in line with Vision 2030, which requires a lot of foreign investment as the country needs a vehicle that will make it attractive to foreign investors hence the VFEX, which has tax benefits.
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