Flash Briefing: Discovery #2 insurance brand globally; Capitec business banking green light; MSM, Netcare

By Alec Hogg

Here’s your Biznews Flash Briefing:

  • Innovative South African group Discovery has been rated as the world’s second strongest insurance brand. In a 15-page report on its annual Global Top 100 Insurance brands results, compiler Brand Finance spotlights Discovery as the notable new entrant to the 2019 list. The world’s leading independent brand valuation consultancy gave the South African company a brand strength index score of 86 out of 100, putting it fractionally behind its Chinese joint venture partner, Ping An which is the world’s number one with a score of 87.1. China Life is third, India’s LIC fourth and GEICO, a subsidiary of Warren Buffett’s Berkshire Hathaway, completes the global top five, 3.7 index points behind the South African group. In terms of total value, Discovery is one of eight new entrants to the Top 100, ranking 94th. The only other South African company in the Global Top 100 is Old Mutual, whose ranking in terms of brand value fell from 89th last year to 97th.
  • South African banking’s great disruptor, Capitec, was yesterday given the green light to acquire a ready-made vehicle to enter the business banking market. The Competition Tribunal has approved Capitec’s merger with Mercantile Bank, which was put up for sale in March 2017 by its Portuguese parent Caixa – such is the time delay for transactions in the highly regulated banking sector. The final step in the merger process is approval from the SA Reserve Bank but given that the Competition authorities approved the deal without any conditions, it is likely the SARB would already have been consulted and given its tacit approval.
  • More action will play out at the Competition Tribunal today where two large players in the cigarette sector, Gold Leaf Tobacco and Philip Morris South Africa, will be petitioning for a blocking of the proposed merger between their competitor BAT and the country’s leading Vaping brand, Twisp. The proposed deal overcame a major obstacle after the Competitions Commission reversed an initial prohibition recommendation after agreeing conditions. The ten-year-old vaping business is hot property, having been one of the first to market in SA. Twisp has 66 dedicated vaping shops and produces the e-cigarette products and a range of flavours from a factory in Cape Town.
  • South African share prices ended yesterday’s trading session slightly lower with a half percentage point drop reflected in 182 shares falling and 155 finishing higher. Mobile phone company MTN picked up another 1.25% ahead of today’s listing of its Nigerian subsidiary in Lagos, taking the stock’s gain to more than 30% in just over two months. Another top 100 company which built on good recent gains was food producer RCL up 3% yesterday, taking its rise in the past fortnight to 16%. At the other end of the spectrum, hospitals group Netcare’s post-results selloff continued with a 3.5% price drop yesterday. Netcare shares have now lost 13% in little over a week. Also under pressure was Walmart’s SA subsidiary Massmart, whose slide continued with another 2% decline. The stock is down 12% since last Monday’s announcement that Guy Hayward, its CEO of the past five years, would be stepping down before the end of the year.