Later today, almost 17 years after it arrived in London with a bang, Old Mutual is set to announce a return to its roots. It will bring to an end Corporate South Africa’s grand globalisation strategy when, in 1999, three of the country’s biggest companies shifted their headquarters and primary stock market listings to the UK.
Old Mutual had the rockiest ride, its stock price posting compound annual growth of just 7% since the adventure began. Along the way, an aggressive expansion into the US cost billions, creating liabilities which almost bankrupted the company. A buying spree into Europe fared little better. The two South African assets, 54% of Nedbank and the Old Mutual SA business, still generate virtually all of the group’s profits.
Today’s announcement has been long in gestation. Already back in April, the board said Bruce Hemphill would take over as CEO from November. So the highly rated former Standard Bank and Liberty Life executive had seven months before taking up his new office to familiarise and fine tune a plan intended on closing Old Mutual’s 25% ratings discount.
Even though the share price eased back this week as we got closer to the big announcement (from Monday’s hyped-up 200p to 185p) I’ve got a feeling investors won’t be disappointed. Hemphill is not the kind of man to blow his first big assignment as CEO.
