Investment opportunities in listed agro-allied industries
Tapuwa Mashangwa
THE elections have come and gone and a new dawn is approaching for Zimbabwe. Already Foreign Direct Investment commitments into the country have been on the positive trajectory over the last six months. The economic sectors already benefiting from this progress encompass the manufacturing, industrial, tourism, banking, mining and agricultural sector.
It is more than certain that there will be new appearances on the Zimbabwe Stock Exchange (ZSE), as potential investors eye domestic opportunities.
There are currently 12 agricultural related companies listed on the ZSE among a total 61 companies after Cottco Holdings Limited and CFI Holdings Limited were de-listed. The first agro-based company to be listed is Delta Corporation Limited, which was listed in 1946 and is still one of the best performing companies.
The latest company listed is Simbisa Brands Limited that was listed 2015 meaning that it is about three years now since any new agro-company was listed.
Our agricultural sector is a versatile part of our economy. Beverage companies listed include African Distillers Limited (listed in 1951) and Delta Corporation Limited (listed in 1946). Among the agro-industrial firms there is National Foods Holdings Limited (listed in 1970). Food companies consist of Dairiboard Holdings Limited (listed in 1997), Simbisa Brands Limited (listed in 2015) and Starafricacorporation Limited (listed in 1947). And those that are into the production of primary agricultural products are Ariston Holdings (listed in 1948), Border Timbers Limited (listed in 1959), British American Tobacco Zimbabwe Limited (listed in 1961), Hippo Valley Estates Limited (listed in 1964), Padenga Holdings (listed in 2010) and Seed Co Limited (listed in 1996).
A question commonly asked is why should a company list on a stock exchange. An agricultural company may want to be listed so as to raise money. As a company grows spreading ownership risk is crucial. Original shareholders maintain their access to profits whilst simultaneously keeping a percentage of the company.
According to Manoj Chahar, chief executive and founder of Moneyfrog: “In addition to the prestige a company gets when their stock is listed on a stock exchange, other advantages for the company include — being able to raise additional funds through the issuance of more stock. Companies can offer securities in the acquisition of other companies, stock and stock options programmes can be offered to potential employees, making the company attractive to top talent. Companies have additional leverage when obtaining loans from financial institutions; market exposure — having a company’s stock listed on an exchange could attract the attention of mutual and hedge funds, market makers and institutional traders; indirect advertising — the filing and registration fee for most major exchanges includes a form of complementary advertising. The company’s stock will be associated with the exchange their stock is traded on and lastly for brand equity. Having a listing on a stock exchange also affords the company increased credibility with the public, having the company indirectly endorsed through having their stock traded on the exchange.”
Progressive Information and Communication Technology (ICT) increases global connectivity, henceforth international business operation through listing when coupled with latest technologies will not only aid to increase company share prices but also simultaneously increases clients/customers through various means of advertisement.
It will not be surprising to find share prices of most agricultural companies rising significantly as FDI inflows increase over the coming years. The Zimbabwean population will have doubled by the year 2060, translating to huge agricultural market to supply not only nationally, but regionally and internationally as well.
The time to strategically position oneself, be it as an individual, small to medium agricultural enterprise or large corporation, is now. Opportunities do not wait for one to be prepared. Opportunities and fortune fall upon those that are already prepared for success, those who understand that the responsibility for success lies with themselves and is within their grasp. Already United Refineries Limited is one firm intending to be listed and as the years progress it will become one of the major players of our agricultural sector. The future is green.
The writer is Eng. Tapuwa Justice Mashangwa, Group CEO Emerald International Consortium, CEO Emerald Agribusiness Consultancy headquarted in Bulawayo. He can be contacted on +263771641714 and email: [email protected]