ROWING ITS OWN BOAT

Old Mutual has returned to its Southern African home market. What can new CEO Peter Moyo do to reinvigorate the iconic but lumbering cash cow? Moyo’s management team insists the group still has plenty of room to grow — but many other firms will want to ea

Shortly after the full-year results in March 2018, a fresh yet very familiar listing will take place. The new Old Mutual Ltd will be the group stripped down to its oldest and most profitable components, without its developedmarket legs. This is the “managed separation” process driven by group CEO Bruce Hemphill, which has already resulted in all but 5% of US asset manager OMAM being sold. Nedbank has been promised a more independent future, as more than R30bn of shares held by Old Mutual will be unbundled, and there will be two new listings, Quilter in the UK and Old Mutual Ltd, the Sa-based group which has the highest public profile.

Old Mutual was once described as being as familiar a trademark in Southern Africa as Castle Lager. Old Mutual might not be as refreshing but it is better for your health, at least your financial health. Who anywhere in Southern Africa wouldn’t recognise its quasi-masonic triple anchor logo? After all, it has 6.1m customers in SA, 1.1m in Zimbabwe and 320,000 in Namibia.

In these three markets Old Mutual will still aim to be all things to all people, according to Peter Moyo, new CEO of Sabased Old Mutual Ltd. His priority will be to make sure the product range remains relevant. But it is still highly industrialised: like Castle, it has giant operations spewing out standardised products. It will never be a craft brewer. A few products such as funeral cover even straddle the mass, middle and wealthy markets. As a mature business the returns on equity are at least good in all the Southern African operations. Moyo aims to keep sweating this, mainly through cost-cutting and more efficient use of IT. The only business over the past few years that was thought to be unable to reach an acceptable return on equity, and got closed down, was the Oxygen medical aid in SA.

The Old Mutual brand hasn’t achieved anything like domination in the rest of the world. In the US there is bemusement that a company would call itself “Old” (it is no accident that General Motors dropped the Oldsmobile brand), while for any proprietary company to call itself “Mutual” is considered equally bizarre. In its 20-year foray into the wider world, Old Mutual was the poster child for bad capital allocation. And while the spin doctors are pushing the line that Old Mutual is “coming home”, it is coming home humiliated. It would not have voluntarily left its plush offices in the City of London.

What it means: Old Mutual chair Trevor Manuel could play a hugely influential role if the ‘right’ ANC faction gets in at the elective conference