File image: IOL

HARARE - Old Mutual's unit in Zimbabwe is exploring other investment markets as a result of Zimbabwean investors troubled monetary assets. 

The alternative investment markets include Power generation, Diaspora market, and Micro lending. 

Old Mutual, which operates insurance, banking and property units in Zimbabwe, is the country's biggest financial services group.

Jonas Mushosho, group chief executive officer at Old Mutual Zimbabwe said at a briefing in Harare on Wednesday that "rapid growth in the price of equities" in the liquidity strapped country "reflects fear of monetary assets".

Cash and foreign currency shortages in the country are giving rise to investors "now fleeing" to real assets.

One of the strategies aimed to avoid risky investment options sees Old Mutual Zimbabwe tapping into the diaspora market. 

This strategy has lined in a company called ZimPay to assist with money collection from mortgage holders outside Zimbabwe. 

"We have tapped into the diaspora market. We have entered an arrangement with ZimPay who collect money from people's bank accounts from people outside the country and forward it to us and we have done this on mortgage repayment".

Mushosho adds that Old Mutual Zimbabwe has just completed a 1.6MW power plant in Chipinge, near the border with Mozambique. 

As a result of Zimbabwe's power deficits, it has signed independent power producer agreements to ramp up output of electricity for the country.

According to officials, the Old Mutual Zimbabwe power plant is already operational and will be officially launched this month. 

Old Mutual has a 20 year power purchase agreement with the Zimbabwean state power utility and is expecting an internal rate of return of about 17%, after injecting $5 million into the project.

Chief finance officer, Takura Mudekunye said the total revenue for the half year to June was 175% up at $384.9 million. 

Whilst non banking investment income amounted to $216 million while banking interest income stood at $46 million, total assets for Old Mutual closed the period 10% higher at $2.3 billion against total liabilities of $1.9 billion. 

The adjusted operating profit position, made up of operating profit and smoothed returns after removing hot term fluctuations on investments was 11% higher at $36.8 million. 

According to Mushosho the two businesses that do the heavy lifting are banking and life insurance. 

He said Old Mutual has "enhanced our capacity on the private equity portfolio" while it also obtained a licence for micro lending and tarted lending to the public in May.

Despite the enhanced capacity of the private equity portfolio, gross written premiums for the group's insurance arm was however 2% down at $100.8 million because the "annuity business is down owing to company closures and retrenchments". 

Non life insurance sales inched up 3% to $153. million while life sales were five percent down at $10 .4 million, with the retail category markedly lower.

This reflected the "difficulties individuals and households are facing" in the Zimbabwean economy.

"In this country we have limited options in terms of where to put money. alternative investments is one option to diversify from monetary assets.

"Our property portfolio has not done well because of the operating environment but we believe here will be boost on capital appreciation," said executives at Old Mutual Zimbabwe. 

- BUSINESS REPORT ONLINE