Nedbank Group depository receipts list on VFEX

On March 11, 2016, Old Mutual plc announced its strategy of Managed Separation as the Board believed that the long-term interests of Old Mutual plc shareholders and other stakeholders would be best served by separating the four businesses then owned by the Old Mutual plc group. 

It believed that the structure at the time trapped value and inhibited the efficient management and funding of the growth and potential of the four strong individual businesses comprising the Group.

In 2018, the managed separation was completed and Nedbank Group Limited was subsequently listed on the Johannesburg Stock Exchange (JSE) in South Africa.

Nedbank Group Limited is a financial services group offering wholesale and retail banking services, as well as insurance, asset management and wealth management services.

Through its principal banking subsidiary, Nedbank Limited, the group is one of South Africa’s four largest banks. Apart from its predominant exposure to the South African market, the business also has subsidiaries in Lesotho, Mozambique, Namibia, eSwatini (Swaziland) and Zimbabwe.

As Nedbank was not listed in Zimbabwe, it contracted Corpserve Registrars (Corpserve) to set up a share dealing service to facilitate trading by their Zimbabwean shareholders on the JSE.

In compliance with tax and exchange control requirements in South Africa, shareholders on the Zimbabwe branch register had to receive their shares through a nominee facility that met the legal requirements of South Africa.

The Problem

Currently, Nedbank shareholders can only sell their shares through a facility, which captures and provides an order management and trade routing facility to JSE via an intermediary also appointed by Nedbank.

Nedbank shareholders do not have a localized exit mechanism at this time.

The cumbersome trading and settlement cycle time of the current system.

The sale proceeds of shareholders are subject to foreign exchange surrender regulations. Zimbabwe Depository Receipts

The proposed solution is centered on the infrastructure and technology available locally. Zimbabwe Depository Receipts (ZDRs) are equity-like instruments issued by a Depository (in this case, Corpserve Nominees) and they represent ownership of an underlying asset such as a foreign country’s publicly listed and trading equities (in this case, Nedbank Group Limited ordinary shares).

Zimbabwe Depository Receipts will be issued in Zimbabwe via a non-issuer-sponsored private placement under Corpserve Nominees.

This indicates that Nedbank Group Limited will not be the issuer of Nedbank ZDRs on the VFEX and will therefore not play a role in the proposed listing.

However, Nedbank has submitted a letter of no objection for the non-issuer-sponsored facility. The Nedbank ZDRs shall be issued to Nedbank shareholders on the Zimbabwean branch register who are willing to receive them, and listed on the VFEX.

Benefits of Proposed Solution

Considering the challenges posed by the current model, the proposed listing will enable current shareholders and new investors to gain exposure to Nedbank through Nedbank ZDRs on the VFEX, the lengthy trading and settlement turnaround time of the current process will be drastically reduced, the foreign exchange surrender requirements.

These requirements will not apply on VFEX as the new model will facilitate trading in foreign currency. Moreso, holders of Nedbank ZDRs will be able to pledge Nedbank ZDRs as security / collateral against local borrowings.

For more information contact:

2nd Floor ZB Centre, Cnr. Kwame Nkrumah & 1st Street

Harare,

Zimbabwe

Tel: +263 242 751559-61

E-mail: [email protected]