Foreign buyers are making a comeback on the Zimbabwe Stock Exchange (ZSE) in December, with particular interest in Old Mutual plc shares and take positions as the group breaks its vast financial empire into four strategic units.
After mainly offloading their holdings since the introduction of surrogate currency bond notes in November last year, foreign buys stood at $11.6 million as at December 21, compared to sales worth $6.12 million, resulting in net cash inflows amounting $5.5 million.
Old Mutual plans to break the group into four independent businesses namely Old Mutual Emerging markets (OMEM), NedBank Group, Old Mutual Wealth (OMW) and Old Mutual Asset Management as part of a strategy to unlock and create significant long-term value as well as removing the significant costs arising from the current structure.
“If you take a closer look at the foreign trades, you will realise that Old Mutual has got a huge chunk of foreign buys, which is probably the main reason why we are seeing a net buying position on the local bourse,” an equity analyst said.
Foreigners expect to reap significant profit upon completion of the transactions involved in separating the group’s units.
“For foreigners what it simply means is that if you buy Old Mutual shares today, you are likely to get more shares in the future when the operations get separated upon completion of the break up,” said an asset manager.
Old Mutual Asset Management is already independent from Old Mutual plc. During H1 2017 Old Mutual plc sold and contracted to sell approximately 45 percent of the business for net proceeds of $785 million, which reduced Old Mutual plc’s stake to 5.5 percent.
The managed separation strategy also includes the sale of 26 percent stake in Kotak Mahindra Old Mutual Life insurance for net proceeds of £138 million, due to complete in H2 2017.
Additionally as part of the managed separation strategy, Old Mutual Wealth Italy was sold for £210 million.
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