Local furniture retail group, Furnmart, says its decision to delist is motivated by the Botswana Stock Exchange’s (BSE) upcoming rules requiring companies to increase shares held by the public from 20% to 30%, BusinessWeek has learnt.
Furnmart shareholders are scheduled to meet in December to discuss the P0.65 share offer for delisting and other details.
The BSE new rules commence in January, but listed companies are expected to have complied with the 20% to 30% free float increase by next month. Furnmart, which owns a chain of stores throughout Botswana, Namibia and South Africa, including the higher-end HomeCorp brand, first listed on the BSE in 1998, having evolved from being a mostly family-owned entity. By July 31, 2018, about 23% of Furnmart’s shares were in public hands, suggesting a forced increase to 30% would be difficult.
This week, the group’s deputy chairperson, Tobias Mynhardt said in addition, Furnmart had not realised the anticipated capital growth of its counter, due to low liquidity on the BSE.
“Over the course of the last six years, our stock has been illiquid in the market with trade of our shares being less than three percent of those in issue. This, to some extent, has inhibited our market capitalisation,” he said. Mynhardt said the retail furniture business model had found limited opportunities
“The lack of opportunities for growth together with limited demand for our shares means that there is no longer the requirement to raise capital, even if we could, and therefore there are no real benefits to the company being listed,” he said. “With the new BSE regulations, we will no longer be able to meet the requirements in 2019 (and) delisting is a natural and obvious step.”
The deputy chairperson said the board took the decision in consultation and with the approval of the BSE. He said in line with the Exchange’s rules, investors have been offered an exit mechanism for those who do not wish to hold unlisted shares.
“Furnmart itself is offering to buy those that up until now have not been able to sell their shares.
“This gives an opportunity for many of our shareholders to exit at a price 20% higher than where the share has been trading for more than a year,” he said.