Listed notes: Options for Izwe’s capital raising

On 7th May 2018, the Board of Izwe Loans Zambia Limited announced its intention (through SENS Announcement on LuSE) of reviewing and considering various strategic growth opportunities that included pursing a listing on the local exchange. Fast forward to present day, the board further reiterated through their Company Secretary HLB Zambia that holders of its listed notes needed to be aware that its intentions were still on the cards as it considered strategic growth opportunities.

What was interesting was that the announcement came with special mention of the company’s listed notes. A listed security is a financial instrument that is traded through an exchange, such as the LuSE. When a private company decides to go public and issue shares, it will need to choose an exchange on which to be listed. To do so, it must be able meet that exchange’s listing requirements and pay both the exchange’s entry and yearly listing fees. Listing requirements vary by exchange and include minimum stockholder’s equity, a minimum share price and a minimum number of shareholders. Exchanges have listing requirements to ensure that only high quality securities are traded on them and to uphold the exchange’s reputation among investors.

The list note in question is the K265 million medium term note program that was listed in 2014. At that moment, Izwe had already issued three kwacha based bonds of K20 million each out of the K265 million in addition to USD 10 million note at 13%.

That is why it was important to issue the cautionary note: “Holders of the Company’s listed notes are advised to exercise caution and to seek professional advice from a licensed investment advisor when dealing in the company’s securities until a full announcement is made.”

Going forward, it appears that Izwe’s appetite for the local exchange is on the increase as it now considers putting equity on the table in the form of listed shares on LuSE. Prior to this, they would have had not concerns of scrutiny from Shareholders, but it appears they now have room for more investors who will have a say at Annual General Meetings. This is a minimal trade off as the company looks intent to grow even further.

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