Old Mutual considers Zimbabwean stock option

Insurance giant Old Mutual is studying a proposal to give holders of its Zimbabwean stock an option to sell, allowing them to get paid out for shares that have been suspended for four years. Under the plan, they would get a one-time opportunity to sell the shares on the JSE, according to Shelton Sibanda, chairman of the Fund Managers Association of Zimbabwe. Fin24 reports that the authorities froze the shares in June 2020, complaining that trading in the SA insurer’s stock was contributing to a local currency crisis. Businesses were using Old Mutual’s cross-listings in London, Johannesburg and Harare as a proxy to calculate the true cost of goods and services as inflation spiralled and the Zimbabwe dollar crashed. The insurer last week said Zimbabwean authorities approached it in April with the share-sale plan. Africa’s biggest insurer by assets is ‘engaging’ with authorities ‘to clarify the practical aspects of their proposal to achieve an outcome that is commercially viable and respects the interests of our shareholders in Zimbabwe,’ Old Mutual said in a statement. The firm has about 30 000 Zimbabwean shareholders, including pension funds, property companies, banks and retail investors.

Fin24 notes that the Zimbabwean Old Mutual shares would be transferred to the Johannesburg-traded register and funds from their sale repatriated in line with exchange-control rules. ‘It’s not the best solution, but it’s a compromise to also help pensioners, who are suffering as a result,’ Sibanda said. The southern African nation’s long-running currency crisis reached a tipping point four years ago, when authorities blamed trading in Old Mutual shares for undermining the Zimbabwean dollar. Businesses developed a measure known as the ‘Old Mutual Implied Rate,’ or OMIR, calculated from the Harare share price relative to the levels on foreign stock exchanges, to use in transactions. Old Mutual has always denied any wrongdoing.

Full Fin24 report