Fanfare: Peter Moyo, CEO of Old Mutual Ltd, left, and Trevor Manuel, chairman of Old Mutual, at the listing event for Old Mutual at the JSE in Sandton. Picture: FREDDY MAVUNDA
Fanfare: Peter Moyo, CEO of Old Mutual Ltd, left, and Trevor Manuel, chairman of Old Mutual, at the listing event for Old Mutual at the JSE in Sandton. Picture: FREDDY MAVUNDA

Old Mutual Ltd’s share price was mostly a sad match for the thunder of vuvuzelas that welcomed the 173-year-old firm’s JSE listing at a ceremony on Tuesday.

A crowd of supporters sporting green vuvuzelas at the market opening at the JSE’s Sandton headquarters was unable to kickstart trade in the share. Despite muted trade, the stock closed 3.16% higher at R29.40.

Old Mutual, which has had a primary listing in London and a secondary listing in Johannesburg since it ceased being a mutual in 1999, is now firmly back on South African soil after nearly two decades of wanderlust that have yielded paltry shareholder returns.

Old Mutual shareholders were getting "an insurance group run from South Africa by South Africans", said Old Mutual Ltd CEO Peter Moyo.

The listing marks the end of Old Mutual’s four-way split, recognition that the sum of the parts was more valuable than the unwieldy conglomerate it had become. Old Mutual listed in Malawi, Namibia and Zimbabwe on Tuesday.

Old Mutual has been split into four independent businesses — Old Mutual Asset Management, Quilter (formerly Old Mutual Wealth), Old Mutual Emerging Markets and Nedbank. Quilter listed on the London Stock Exchange on Monday, with a secondary listing on the JSE.

Old Mutual Ltd comprises the emerging markets unit and the group’s 54% stake in Nedbank that will be reduced to about 20% in the next six months.

'Reckless expansion spree'

For all the fanfare about Old Mutual’s homecoming, shareholders will be less than pleased over what deputy chairman of Sasfin Securities David Shapiro described as a "reckless expansion spree".

"They weren’t conservative. Whatever was put on their desk they went after," Shapiro said.

Among Old Mutual plc’s more eye-watering purchases were the £525m acquisition of British financial services company the Gerrard Group in 2000; the 2001 acquisition of Fidelity & Guaranty Life for $635m in the US; and the 2005 purchase of Skandia for $6bn.

Some of these were knocked by the global financial crisis and in many cases Old Mutual had to sell them for less than it initially paid.

Julian Roberts, CEO of Old Mutual from 2008 to 2015, had "cleaned up the whole operation for [current CEO, Bruce] Hemphill to come in and embark on the latest episode", Shapiro said.

Hemphill is to be compensated to the tune of £9m for his efforts, partly conditional on the total shareholder return, as measured in March 2019, that the managed separation yields.

Old Mutual’s failed global escapade reflects in its share price. Since its demutualisation and listing on July 12 1999, Johannesburg-listed Old Mutual plc has increased 189%. Rival Sanlam’s share price has gained 849%.

"Sanlam has built extensive relationships with the investment community, particularly offshore," Avior Capital Markets analyst Warwick Bam said. Old Mutual recognised just how big the perception gap was, he said.

Trade was muted as investors waited to see what the rebalancing of the Top-40 and MSCI emerging markets index, in which Old Mutual Ltd would be included, would do to the share price.

Emerging market investors based outside SA were reserving judgement until they had met the management and more analyst research on the company was available, Bam said.