Old Mutual’s Zim unit taps into power, diaspora
OLD Mutual’s unit in Zimbabwe is tapping into alternative investment markets such as power generation, diaspora market and micro-lending as investors in Zimbabwe rush for cover from troubled monetary assets.
The company, which operates insurance, banking and property units in Zimbabwe, is the country’s biggest financial services group.
Jonas Mushosho, the group chief executive at Old Mutual Zimbabwe, said yesterday that “rapid growth in the price of equities” in the liquidity-strapped country “reflects fear of monetary assets”.
As a result of cash and foreign currency shortages in the country, investors were “now fleeing” to real assets.
As one of the strategies to move away from risky investment options, Old Mutual Zimbabwe is tapping into the diaspora market.
“We have tapped into the diaspora market. We have entered an arrangement with Zim Pay, 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.”
Old Mutual Zimbabwe has just completed a 1.6MW power plant in Chipinge, near the border with Mozambique. Zimbabwe has power deficits and 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 launched this month.
The company has a power purchase agreement with the Zimbabwean state power utility, valid for 20 years, and it is expecting an internal rate of return of about 17 percent after sinking $5 million (R67.42m) into the project.
Chief finance officer Takura Mudekunye said total revenue for the half-year to June was 175 percent up at $384.9 million. 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 percent 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 percent higher at $36.8 million.
Mushosho said the two businesses that do “the heavy lifting are banking and life insurance”.