Old Mutual sights Africa expansion opportunities

Insurer Old Mutual fired the starting gun on an ambitious African expansion strategy, encouraged by the continent's robust economic growth, as it reported a 17 percent jump in its 2011 earnings.

London-listed Old Mutual, an Anglo-South African financial conglomerate with insurance, banking and asset management businesses across four continents, has identified “exciting growth opportunities” in Africa, it said on Friday.

Africa

“We have thought for many years whether we should push more into Africa, and up until this point we've been happy with the assets we've got,” Old Mutual Chief Executive Julian Roberts told reporters on a conference call.

“Now we think it is the right time to grow our business in Africa - you just have to go round the various African countries to see how it's very different from what it was, say five years ago.”

Old Mutual, a leading South African insurer and owner of the country's fourth biggest lender, Nedbank, wants to grow in the major markets of east and sub-Saharan Africa, building on its acquisition last month of Nigerian insurer Oceanic Life.

Roberts declined to provide further detail, but said Old Mutual aims in time for its shares to be seen by investors as a proxy for the African economy.

“It's quite true, I would like Old Mutual to be known as the company you invest in ... for that African exposure,” he said.

Old Mutual, which listed in London in 1999 and launched a series of overseas takeovers aimed at reducing its dependence on its historic home of South Africa, also reported a 2011 operating profit of 1.61 billion pounds ($2.6 billion).

That was just shy of the 1.63 billion pounds expected by analysts in a company poll.

The figure includes Old Mutual's Nordic life businesses, sold in December as part of a retrenchment plan aimed at soothing investor fears the group's sprawling structure had dulled its focus and held back its share price.

As part of the retrenchment strategy, Old Mutual last year also offloaded its US life unit and aims to float its US asset management arm and sell its 52 percent Nedbank stake.

The disposals will help the company repay 1.7 billion pounds of debt by the end of 2012, it said on Friday, up from an original target of 1.5 billion pounds.

“At the strategic level, Old Mutual delivered in spades in 2011, for which we give the group considerable credit,” Shore Capital analyst Eamonn Flanagan wrote in a note.

Old Mutual shares were up 1 percent at 164.35 pence by 11:45 SA time, outperforming a 0.2 percent rise in the Stoxx 600 European insurance index.

The stock has risen 20 percent since the start of the year, reflecting optimism over Old Mutual's restructuring, easily outpacing the index's 13 percent increase.

Excluding the Nordic businesses, the company had a 2011 profit of 1.52 billion pounds, an increase of 14 percent.

Old Mutual is paying a total dividend for 2011 of 5 pence per share, an increase of 25 percent, as well as a previously announced special payout of 1 billion pounds, or 18 pence per share, funded by the Nordic disposal. - Reuters

Source : iol.co.za
Tags : Old Mutual, African expansion, new economic model, africa growth, Julian Roberts, South African financial company