SeedCo Limited resumed trading on the Zimbabwe Stock Exchange after almost 4 months of absence from the bourse. The story is long and to start at the beginning we would have to go back a little about one year to understand the steps that lead up to where we are now and why we are there.

SeedCo vs SeedCo International

There are of course two separate entities here being SeedcCo Limited and SeedCo International Limited. The latter is a dually listed counter that also appears on the Botswana Stock Exchange. This counter was previously listed on the ZSE and BSE with full fungibility. Fungibility is the ability to buy shares on one exchange and transact with them on another exchange. In early 2020 the minister of Finance Professor Mthuli Ncube suspended fungibility of all ZSE listed shares. There were 3 fungible counters at the time being Old Mutual, PPC and SeedCo international. This was to prevent the use of the counters to move money in and out of the country as they were believed to be used at the time.

ZSE closed and SeedCo suspended

The assault on the ZSE wasn’t over as on June 26th 2020 the permanent secretary in the ministry of information Nick Mangwana announced a ban on the ZSE and mobile money operators. The ZSE complied but mobile money operators did not, instead of curtailing certain functions. The allegations were that these platforms were being used to fuel the parallel market for foreign currency.

ZSE reopens and SeedCo sent to VFEX

After a month of closure, the ZSE reopened on the 3rd of August 2020 with the three fungible counters absent from the bourse. In the background, hard work was being put in to set up the US dollar-denominated Victoria Falls Stock Exchange (VFEX) in the Victoria Falls financial centre. The three fungible counters were said to be working on plans to list on the VFEX. While SeedCo International agreed, Old Mutual and PPC have been reluctant to make the move thus far.

SeedCo International to acquire SeedCo

SeedCo International sought to consolidate its business by acquiring the shares of SeedCo Limited held by other parties and delisting it from the ZSE to absorb it into SeedCo International. Plans were set in motion and SeedCo limited shareholders voted in favour of the move and resolved to complete the move.

RBZ blocks move

The move for SeedCo International to acquire SeedCo was simply awaiting exchange control approval. The approval however did not come. The Reserve Bank of Zimbabwe blocked the move and though we have not received clear communication on the reasons proponents argue that SeedCo’s work, particularly in staple crop production and seed development could not be left to be fully controlled by a multinational company. And this is a valid risk that the central bank and government for that matter, would certainly want to avoid.

Valid argument but…

The problem of course is a familiar one. In theory, everything went according to the book but it should really never have gone that far given how things have turned out. A lot of resource waste could’ve been avoided not to mention the delisting and now relisting of SeedCo on the ZSE. And this goes for both sides, surely the RBZ resistance would’ve been somewhat foreseeable to SeedCo International given the sensitivity of the company’s operations. The intellectual property remains in the hands of SeedCo limited while SeedCo international is the outward business unit for international transactions. The move would’ve taken the intellectual property out of Zimbabwean hands. It’s also important to understand that while the matter was put to a vote that went in favour of the move it does not amount to complete agreement by all shareholders. There are many voices that made good arguments against the move. Perhaps SeedCo Limited showed a bit too much anxiety by quickly delisting from the ZSE.

Meanwhile, SeedCo resumed trading Monday the 21st of June. The company last traded at a price of 21.6089 on the 23rd of February 2021. To prevent a scenario of tedious price discovery it was allowed to free float and find a price even if it exceeds the 20% daily change limit. SeedCo closed the day as the highest riser at ZWL$65.8006 meaning it was up 204.51% on its last traded price.