CAMBRIA Africa, whose shares in Old Mutual Limited were impacted on when the company was suspended from the Zimbabwe Stock Exchange (ZSE), has pleaded with authorities to restore fungibility and allow foreign investors to repatriate their shares to the Johannesburg Stock Exchange (JSE).
Old Mutual was suspended from the ZSE alongside seed producer Seed Co, which became the first to list on Victoria Falls Stock Exchange when it opened in October 2020. At the time, government accused dual listed counters of inflaming Zimbabwe’s economic crisis.
Apart from ZSE, Seed Co also traded its stock on the Botswana Stock Exchange.
JSE-quoted cement maker PPC was also caught up in the crackdown.
The suspension, which has triggered valuation headaches for investors in Old Mutual and the other two counters, was a result of government’s suspicion that fungible counters — those trading on more than one stock exchange — were aggravating depreciation of the domestic currency, which has been falling since 2016.
“We aim to realise the value of the 204 047 Old Mutual shares and 2 692 Nedbank shares by transferring these shares to the South African register,” Cambia Africa said in its audited results for the year ended August 31, 2022.
“The total value of this portfolio was US$168 120 based on the Johannesburg Stock Exchange closing prices as at 11 September 2023. These shares were originally purchased on the JSE and subsequently transferred to the ZSE.
“However, before their fungibility could be realised, trading was suspended by the Zimbabwean government. We persistently urge the Government of Zimbabwe to reinstate fungibility and permit foreign investors to repatriate Old Mutual and Nedbank shares to the JSE.”
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When the common shares were suspended on the ZSE on July 31, 2020, they were valued at US$122 820 based on the closing price of Old Mutual on the JSE at the year-end of its 2022 financial year.
By way of an unbundling by Old Mutual in November 2021, Cambria received 2 692 Nedbank shares, which are retained in Zimbabwe.
Responding to questions from businessdigest at the Old Mutual Limited Zimbabwe (OMZL)’s virtual analyst briefing for the half-year ended June 30, 2023 recently, the firm’s chief executive officer Samuel Matsekete said the authorities assured them the suspension would soon be resolved.
“We still have the Old Mutual Limited share suspended and just to remind colleagues this is really the Old Mutual Limited share not the Old Mutual Zimbabwe share which is listed on the Finsec (Financial Securities Exchange (Pvt) Ltd),” Matsekete said.
“The engagements with the authorities around the lifting of that suspension have been ongoing. A number of proposals have been under discussion with authorities. These discussions have also involved the principals from Old Mutual who are the primary authority that is listed.
“We have been assured that this matter is going to be concluded soon but that really is the prerogative of authorities and how they view the position around the share.”
He said authorities feared that the return of Old Mutual Limited would see the return of the Old Mutual Implied Rate, which may be used to determine the exchange rate.
“So, we are still where we were when we last reported. There still have been engagements,” he said.
At the time of the suspension, Old Mutual had a valuation equivalent to US$91,74 million on the ZSE with an average daily value traded of over US$250 000 that week.
