Timing error costs GetBucks

Senior Business Reporter
MICROFINANCE institution GetBucks Zimbabwe’s first day of listing on the Zimbabwe Stock Exchange received no trades in a move that investment analysts blamed on a timing error in scheduling their initial public offering.

GetBucks listed on the ZSE on Friday after it launched a bid to raise $3,2 million in an initial public offering.

The money-lending institution began operations in the country three years ago. The Initial Public Offering (IPO) is the first since ZECO Holdings listed in 2007.

Mauritius registered GetBucks Limited owns 55 percent shareholding of the local unit while Zimbabwean investment firm, Brainworks owns 34,06 percent, with the remainder held by various shareholders, including pension funds and insurance firms.

According to information from the ZSE, the bid price was 3,5c while the offer price was 4c. The IPO was 342c.

Lynton-Edwards stockbrokers’ research analyst Kudzanai Sharara said some of the reasons why there was no uptake of the shares were that investments into the financial sector have not been that good and that local participation on the bourse is generally low.

“Local investors have not been buying shares and there is still an issue of confidence in the financial sector. This might have affected the uptake of the shares although one good thing is that there were buyers who were willing to pay a price higher than the IPO,” said Sharara. He said despite the lack of uptake of the shares, sellers were not willing to dump their shares at the bid price.

An investment analyst who spoke on condition of anonymity said GetBucks put in their listing at the wrong time of the year which is the beginning of the year.

“During the beginning of the year, institutional investors would have closed their books and asset managers as well as pension funds are busy with audits hence this timing error cost GetBucks entry into the market,” said the analyst. He said the IPO was also wrongly priced as evidenced by the low demand due to the high price.

According to online reports, Brainworks chief executive George Manyere is on record saying that none of the current major shareholders wanted to sell-off and that the listing would increase the visibility of the GetBucks brand to both the public and private sectors leading to new business opportunities.

The listing will also help the company comply with new ownership requirements of a deposit-taking institution where Brainworks — as a non-financial company as defined by the Reserve Bank — cannot hold more than 25 percent shareholding.
The company has 20 000 customers with 13 branches in major centres in Zimbabwe.

Its loan book stands at $11,6 million with the non-performing portion of that at two percent, much lower than the 15 percent in the banking sector.

The company also runs a successful promissory programme with pension funds. The promissory notes attract 15 percent interest per annum.

In the full-year to June last year, GetBucks reported a $6 million profit before tax from $2,3 million the previous year.