Business today 24-07-07)

ZIMRE Property Investments Limited started trading on the Zimbabwe Stock Exchange yesterday with an initial 3,6 million shares being traded at $2 000 each, becoming the 81st counter on the bourse.
This follows the successful conclusion of its Initial Public Offer which raised more than $554 b

illion from 369 444 444 shares despite earlier fears that it would be a victim of the prices clampdown.
The funds raised would be used to finance acquisitions of property, development and working capital requirements.
Speaking at the listing ceremony yesterday, chairperson Ambassador Don Mothobi said he was excited to see ZPI listing on the stock exchange as it signalled the end of a long process that began with the company releasing its prospectus last month.
“In the circumstances, we are reasonably satisfied with the level of subscription and the total number of shares allotted to investors. This shows that investors are still attracted by companies with a reliable business model and good opportunities for growth.
“As you are aware the IPO was preceded by a private placement to selected investors in exchange for property. This strategy guarantees the core business of the ZPI as a property company.
“The IPO is in line with our strategy to create and preserve value for our stakeholders and our vision to be the first choice provider of real estate solutions in Zimbabwe and the region,” he said.
Soon after launching its listing process a month ago, ZPI concluded agreements for the acquisition of significant pieces of land in Bulawayo and Masvingo, earmarked for development.
He said the company is currently engaged in serious negotiations to acquire additional properties around the country whose long-term benefits to ZPI would be significant.
“I am advised that a significant proportion of the new shareholders are individuals who account for a total book of over 5 000 shareholders. This is important to us as ownership of the company is truly in the hands of the public,” Ambassador Mothobi said.
ZSE chairperson Bart Mswaka said ZPI’s listing was proof that the stock exchange remained the only worthwhile investment destination in the country given the hyperinflationary environment.
He said ZPI stood to reap numerous benefits by listing on the stock market.
“The company is set to benefit from both the development in the property sector and listing on ZSE. We, however, urge ZPI to fully comply with the requirements of the stock exchange,” he said.
According to results of the just-ended public offer 351 162 192 shares of the 369 444 444 of ordinary shares of a nominal value of a cent each that had been put on offer.
Of the total shares subscribed 179 495 525 were subscribed under the IPO while 171 666 667 were subsequently disposed of by the underwriters to an institutional investor.
The remaining shares were underwritten by ZB Bank, Zimbabwe Allied Banking Group and FBC Bank.
ZPI property manager Steven Kapfunde was happy the IPO had lived to its billing.
“We encountered little problems over registration of our prospectus but that was taken care of by our legal advisors. The issue was clarified with the Registrar of Companies and they have acknowledged receipt of our file that could have been misplaced when the Deeds Office was relocating to their new premises.

“The delay will not have a bearing on completion of the deals,” he said.
ZPI opened the IPO late last month at $750 a share before it was re-priced to $1 500, becoming the first IPO to increase in value prior to listing.
THE property sector has been an investment choice for many Zimbabwe beginning the high inflation period. The average house price has continued to go up in line with currency depreciation on the fair value market.
Last year some economist reported that the property secotr created more than investing in hard currency. The dollar depreciated from $96 to the US$ in January 2006 to $2 500 inDecember 2006 translating to a 2 504% depreciation.
 Not to be outdone, property sector recorded a huge gain of about 7000% for the same period. This year, prices continue to run riot. Msasa Parks’ 3-bedroom houses average $9 billion  today from a mere $100 million in December. That translates to a gain of 8900%. Currency market has done 8100%. High Density houses now hover around $4 billion in the Glenview, Budiriro and Warren Park suburbs.
But still, compared to the region, house prices remain very low. The average house price in SA is around R700 000, or US$100 000. But in Zimbabwe that would translate to about $20 billion. With the same amount, an investor can get modest houses in Hogerty Hills, Northwood, Highlands and any other poshy suburb for 3-bedroomed houses. Hence in comparison, the house prices in Zimbabwe continue to be cheap in comparison to SA.

Post published in: Economy

Leave a Reply

Your email address will not be published. Required fields are marked *