Top counters recapitalise

multiple currency system in 2009 with some quoted companies undertaking significant recapitalisations.
It is interesting to note that operationally, companies have now turned the corner and recent capitalisations should provide for more solid position from which to grow.
Post dollarisation a number of companies managed to restructure, right size and adapt to the realities of the new multiple currency environment.
Many of the larger companies that are listed on the Zimbabwe Stock Exchange have also embarked on massive capital expansion projects to increase capacity.
Delta, the biggest counter on ZSE by value has so far invested US$132 million in capacity expansion in the past two years and capital expenditure budgeted for next year’s full financial year is US$67 million.
During the same period, big spending mobile phone operator, Econet Wireless has invested US$430 million into its 3G network and fibre optic project.
Going into the future there are a number of capital raising initiatives that are still on the drawing board and corporate financiers are expected to remain busy.
However – given the prevailing liquidity challenges it seems almost all those companies which were planing capital raising initiatives have put them on hold.
AICO Africa last week indicated they received a pushback from shareholders putting the proposed US$50 million rights issue on ice.
CFI wanted to raise about US$30 million and they are still consulting with shareholders.
Zimre Holdings also made their intentions of going on the market and it seemed it never worked for them with reports that they failed to secure an under write.
RioZim wanted to raise US$40 million and their deal with Essar Africa collapsed.
Hotel group Meikles Africa are also in the hunt for about US$50 million through a rights issue and shareholders are yet to decide.
This however gives a clear picture that all is not well in the corporate sector.
Since dollarisation, there most of the companies, which were on the market whose shareholders failed to successfully follow their rights. During the period under review recapitalisation took place in hotel group African Sun at US$10 million, Art US$4,7 million and NicozDiamond US$4 million.
Medtech were on the market recently to raise US$1,6 million but the initiative was poorly subscribed – with underwriters Westminister taking the chunk of the stake.
OK Zimbabwe’s US$15 million was 70 percent subscribed.
Star Africa raised US$10 million, FBC US$8 million, PGI US$4 million and TN Holdings US$1,1 million.
Growth in the corporate sector is also bouyed by developments in the country’s financial sector that has not been able to loan for productive purposes.
The banking sector has witnessed growth in total deposits to US$2,5 billion at 31 December last year up from the US$1,4 billion in January last year.
Total loan and advances grew from a mere US$75,6 million in January last year to US$1,5 billion by November last year.
Highly capitalised well managed and cash strong companies are expected to continue investing.
Imara Capital Zimbabwe last week picked CBZ Holdings, Dairibord, Delta, Econet, Innscor, Padenga and SeedCo as some of the highly capitalised companies to continue on a growth path and attract investment.
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