PRIVATE equity firm, BridgeFort Capital Limited (BCL) is considering delisting from the Zimbabwe Stock Exchange (ZSE) after losing a staggering US$36,05 million of its listed value, causing investee companies to reject its shares.
At the beginning of the year, BCL’s listed class A and B shares were valued at US$36,04 million and US$50 000, respectively, but have since fallen to a valuation of just US$30 000 and US$10 000 as of Wednesday.
The massive drop is due to the Zimdollar losing over 895% of its value during the period to reach US$1:$6 926,57 as of Wednesday.
In its annual report for the financial year ended December 31, 2022, BCL chief executive officer Vernon Lapham said the company envisaged moving to the forex only Victoria Falls Stock Exchange (VFEX) after a ZSE delisting.
“The shareholders of targeted investee companies are reluctant to conclude transactions for ZWL listed shares and hence we envisage having to move the listings to the VFEX at the time we manage to conclude a transaction,” he said, in BCL’s 2022 annual report released yesterday.
The poor share price performance caused BCL to experience negative income of $1,48 billion causing an overall loss of $1,44 billion to the company last year.
The loss widened from a $2,24 million experienced in 2021.
In terms of liquidity, the overall poor performance led BCL to remain in an illiquid position having only 51 cents to every dollar of debt as of December 31, 2022.
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“The comprehensive loss for the year is almost entirely made up of fair value adjustments due to the poor share price performance of both the Class A and B shares on the Zimbabwe Stock Exchange,” BCL chairperson Christian Beddies said.
The poor price performance, coupled with the local currency losing value, saw total assets shrinking by a staggering 92% to $131,6 million from a 2021 comparative of $1,64 billion.
Beddies said the operating environment had significantly deteriorated and became less predictable since year-end.
“As a result, doing business has become even more difficult. Considerable management time is spent in reacting to and dealing with various issues which businesses in most of the rest of the world do not have to invest precious time in,” Beddies said.
After changing its name to BCL last year, to reposition itself as a private equity firm, the firm listed BridgeFort Capital Limited Class A — Consumer Goods and BridgeFort Capital Limited Class B shares to unlock more shareholder value.
“The Class A portfolio primarily includes 50,1% of Zvemvura Trading (Private) Limited, trading as MedTech Distribution, and Chicago Cosmetics (Private) Limited, a 51% subsidiary of MedTech Distribution. These businesses primarily sell goods to retailers and wholesalers,” Lapham said.
Under its Class A portfolio, for 2022, the firm made a profit after tax of $568 million, from a 2021 comparative of $373 million, mostly owing to a monetary gain of $743,21 million.
However, the business incurred a significant foreign exchange loss of $586 million relating to legacy creditors and credit extended by foreign suppliers — which is hedged with stock.
“Sales volumes decreased by 23% for the year made up of a volume increase in the first six months of 24% and then a huge decline of 48% in the second half,” Lapham said.
“Turnover increased to $4,26 billion as compared to 2021 turnover of $3,28 billion — an increase of 30%. For internal board reporting purposes turnover was the equivalent of approximately US$3,1 million for MedTech Distribution and US$2,2 million for Chicago cosmetics.”
Regarding its Class B share portfolio, the only asset within this portfolio is a receivable from MedTech Distribution effectively being 50,1% of the value of land in Sunway City owned by MedTech Distribution and valued in its entirety at US$200 000.
“The Class B portfolio continues to only reflect a receivable of US$100 200 relating to 50,1% of the land owned by MedTech Distribution and based on the last valuation of this land at US$200 000,” Lapham said.
In terms of an outlook, the firm will continue to focus seeking opportunities to conclude private equity transactions and assisting underlying portfolio companies in achieving their goals.
