Econet just sent out a press release today to basically say they’d like to go back to their founding roots when the majority of the company’s shares where in the hands of ordinary people, and that to do that they will be splitting the company’s shares 10 to 1.
The split was announced at the beginning of the month. Each existing ordinary share will be split into 10 ordinary shares, making it easier for ordinary Zimbabweans to access them.
The share split announcement comes along with two related developments; the loan offer to the Zimbabwe Stock Exchange (ZSE) for the setting up of an automated trading system and, the announcement in January that soon people would be able to buy stocks on the ZSE using the Econet mobile money transfer service EcoCash.
Here’s the full release:
In a major development since its listing in 1998, Econet shareholders will on Thursday vote for a share split that will enable more small investors to buy shares in Zimbabwe’s largest telecommunications company.
This will be possible after shareholders approve a “ten to one” share split at an Extraordinary General Meeting (EGM) which Econet says has all the signs it will be a success.
Econet says while the share split will not have any impact on the company’s market capitalisation, it will allow investors to trade each split share at a tenth of the current market price of the company’s shares.
This means there will be more active trading in the Econet shares as more people will now be able to afford to invest in the shares.
At listing in 1998, small investors were the majority of shareholders in Econet. However, as the price has risen due to the company’s growth, small shareholders have gradually been squeezed out by large foreign investors and fund managers.
The Econet founder, Mr Strive Masiyiwa, has not been happy with this development and he has personally pushed for the share split.
Econet believes that the share split will not only allow more small investors to buy or increase the number of Econet shares they own, but will also make shareholders in a fast growing company and in which they will over time benefit from the growth in shares,” says the company.
“The public shareholders of the company are numerous, with many ordinary shareholders seeking to buy shares in the company. This share split will open up investment in Econet to more ordinary investors who had been unable to take part due to the high prices,” says Econet.
The share split comes after the Econet board realised following a study that the company’s shares were now so expensive that only foreign investors were buying the company shares. As a result, the level of foreign ownership in the company has shot up from a mere 10% at listing in 1998 to more than 30% today.
As at Tuesday, February 26, the price of one Econet share was $6.90, which means an ordinary member of the public would have to pay $690 to buy just the minimum lot amount of 100 ordinary shares. But after the split, 100 shares will cost less than $68.
Econet says the share split is an important development for small investors who have always wanted to participate in the growth of the company. Millions of small investors had bought the company’s shares when it listed but have been unable to buy more shares particularly after dollarization as the shares became expensive.