No rush on Africa plan – Old MutualComment on this story
Old Mutual will take its time to spend the R5 billion it has earmarked for African growth.
Speaking to Business Report from London, Old Mutual chief executive Julian Roberts said the insurer did not want to repeat the mistakes it had made when it invested in new markets in the past.
He said the insurer now thought twice before throwing money into anything.
“A few years ago, people criticised us for spending money too quickly and not wisely. Now they are criticising us for taking time to spend money…We will take our time,” he said.
Dual-listed Old Mutual has set a goal to become Africa’s financial services champion. But since the company announced the R5bn African growth plan in March last year, it has spent only about R700 million on acquisitions.
Roberts said if it did not find assets that it believed were of value to Old Mutual, it simply would not spend the money.
Even so, Old Mutual is undeterred by the currency volatility in emerging markets or even by sluggish economic growth in South Africa.
Roberts said it realised that currencies in emerging markets were quite volatile but even so, he believed Africa had good prospects.
Old Mutual’s 15 percent growth in full-year profit for the 12 months to December last year was offset by the rand/pound exchange rate.
Roberts said he was happy with the way the group had managed its underlying businesses and the growth it had achieved in all its units.
Old Mutual’s adjusted operating profit stood at £1.6bn (R28.8bn) and was flat in reported currency even though it had grown by 15 percent in constant currency terms.
Roberts said if the company reported in rand, it would have posted substantial growth.
The company had more than 750 000 new Old Mutual and Nedbank customers in South Africa and its new businesses in east and west Africa had nearly 600 000 new customers. Old Mutual South Africa’s gross sales increased by 11 percent to R118bn.
But Roberts said with the rand falling in value, international businesses were going to be important to Old Mutual.
On Friday, Old Mutual announced that it was going to list a minority stake in its US Asset Management business this year. Due to regulatory issues, the company would not reveal more about that transaction but said it was subject to market conditions.
In January last year, Old Mutual sold five of its US affiliates in the asset management business. The group sold its US Life operations in 2010 due to unsatisfactory performance.
Asked why the company was now keen on the US market, Old Mutual finance director Philip Broadley said prospects for the sold businesses were different.
“Right now the US asset management business has over £3bn of funds under management. It’s a very different business,” he said.
Old Mutual shares rose 5.55 percent to close at R35.21 on the JSE on Friday.