National Foods Limited has proposed a voluntary delisting from the Victoria Falls Stock Exchange (VFEX), saying the move would grant the group increased flexibility to streamline its operations and concentrate on long-term strategic objectives.

In addition, the group said it no longer required capital from public equity markets in the near term, reducing the advantages of maintaining a VFEX listing.

The agro-processing firm became the ninth listing on the foreign currency-denominated VFEX when it migrated from the Zimbabwe Stock Exchange (ZSE) in January last year.

National Foods has manufacturing sites in Harare and Bulawayo from which it distributes its products throughout Zimbabwe.

In a circular to shareholders, National Foods is now seeking shareholder approval at an extraordinary general meeting to be held next month.

“A significant portion of National Food’s shares, specifically 75,18 percent, is held by two major shareholders, limiting the influence and participation of smaller retail investors, further supporting the rationale for delisting.

“The delisting will enable National Foods to redirect spending on substantial regulatory and compliance expenses to initiatives that are more closely aligned with the company’s needs,” reads the circular.

The company said the proposed share repurchase offer provided an opportunity for shareholders to access the full value of their shares and address the liquidity constraints associated with the shares’ limited trading activity on the VFEX.

Since its inception in October 2020, VFEX has seen listings from various sectors such as mining, financial services, tourism, hospitality, and clothing.

Analysts contend that the bouse has not yet realised its potential as it is largely characterised by low trading activity. However, despite that, there are pipeline companies in the process of moving their shares to trade on VFEX. These include Bridgefort and Tanganda Tea Company.

Commenting in the circular, non-executive and independent chairman Mr Edwin Manikai said with the full endorsement of the board and shareholders should support the proposed voluntary delisting of National Foods from the VFEX and the accompanying share repurchase offer.

“This decision has been made after careful consideration of several strategic factors aimed at enhancing the group’s long-term growth and operational efficiency.

“The board believes that delisting will grant National Foods’ increased operational flexibility, enabling the group to streamline its operations and concentrate on long-term strategic goals without the constraints and pressures of public market requirements,” he said.

Mr Manikai said with no immediate need for public capital, maintaining the VFEX listing offers limited benefits, particularly given the low liquidity and restricted trading environment that have historically impacted both the VFEX and previously the ZSE.

“These market conditions have impeded shareholders from fully realising or exiting their investments on favourable terms.

“The proposed share repurchase offer provides significant benefits for shareholders opting to exit,” he said.

Mr Manikai said following the delisting, the existing corporate governance structures, processes, and code of business conduct within the group will remain in place and continue to be implemented in accordance with the best corporate governance standards.

He said the board was confident that these measures would position National Foods for sustained success and shareholder value enhancement.

“We recommend that shareholders support this strategic move, which is intended to unlock value and provide a more efficient platform for the group’s future growth,” he said.

National Foods, a subsidiary of Innscor Africa, is Zimbabwe’s largest food manufacturer and produces snacks, biscuits, pasta, sugar beans, baked beans, popcorn, as well as soap and a full range of animal feed.