POWERSPEED Electrical Limited is the latest Zimbabwe Stock Exchange (ZSE)-listed firm to announce a shock exit plan, with directors telling shareholders in a detailed proposal that a continued presence on the bourse would drain vital resources. BY TATIRA ZWINOIRA Firms list on stock exchanges to raise capital. But in Zimbabwe, a string of firms have either exited or are at various stages of de-listing because their share prices are either trading at a discount, or there is little trade in their stocks. Powerspeed’s proposal, which will be put to a shareholder vote during an extraordinary general meeting in the coming weeks, painted a sombre picture of the ZSE, saying there was “very little benefit and considerable costs” associated with listing. “The board of directors of Powerspeed are of the view that in the current environment in Zimbabwe, a listing on ZSE has very little benefit and considerable costs,” Powerspeed directors said. “Powerspeed is a very illiquid stock and trading often does not represent a realistic valuation. “The lack of capital from institutional investors means that the listing has limited value in terms of a mechanism to raise capital and ongoing legal, compliance and audit costs are an impediment to shareholder returns. “In the face of a difficult trading environment the additional costs of being listed, with no compensating benefits, can no longer be borne by the company. Powerspeed has decided to propose to shareholders its delisting from the ZSE. “The ZSE has directed that Powerspeed provide a mechanism to shareholders wishing to exit their shareholding prior to the delisting, which mechanism is detailed in the offer,” the circular said. Zimbabwean companies are battling to ride out of a difficult period highlighted by 471% inflation at the end of October, depressed demand due to extensive de-industrialisation and retrenchments, as well as low disposable incomes. Under the circumstances, the Powerspeed board said it had become difficult to preserve shareholder value, and the feeling was that eliminating costs like those associated with listing on a struggling stock exchange would save one of Zimbabwe’s most resilient industrial operations. But it’s been a difficult year for the ZSE. It was shut down by authorities in June after a prolific bull run unnerved authorities, before the bourse was hit by a string on delisting announcements by key firms. Since the beginning of the year, five other counters have either announced plans to delist, or have already left the bourse, precipitating fears that a new forex denominated exchange, the Victoria Falls Stock Exchange (VFEX), could be attracting the attention of the delisting league. In a flurry of delistings that hit the ZSE from 2011, exiting firms have indicated that maintaining a presence on a bourse that has suffered prolonged IPO droughts had turned into a nightmare. Resources outfit, Falcon Gold, ZimRe Property Investments and the SeedCo group have delisted from the ZSE for various reasons this year, while Dawn Properties is on its way out.