Old Mutual returns to Zimbabwe with shift to dollar-based bourse

Financial services group Old Mutual has re-entered Zimbabwe’s capital markets after a six-year hiatus following the authorities’ 2020 suspension of trading in its shares on the Zimbabwe Stock Exchange (ZSE) over concerns they were being used to derive an implied exchange rate, alongside other market instabilities.

Old Mutual on Friday said it has opted to migrate its secondary listing from the ZSE to the fledgling Victoria Falls Stock Exchange (VFEX), with one of the reasons for the move put forward by the group being that the VFEX is a US dollar-denominated exchange, resulting in lower currency risk than that of the ZSE.

“The board is of the view that the VFEX has come into its own and has now developed sufficient scale and liquidity as a viable alternative trading platform to the ZSE and accordingly supports the migration of Old Mutual’s secondary listing in Zimbabwe from the ZSE to the VFEX and has therefore resolved to proceed with the migration, subject to the requisite regulatory approvals,” the company said.

“Old Mutual believes it is imperative that the suspension of trading on the ZSE be resolved for the benefit of Old Mutual and its Zimbabwean shareholders and that migrating its secondary listing to the VFEX would achieve this.

“The migration would restore the freedom of choice to shareholders on Old Mutual’s Zimbabwean share register, enabling them to either trade their shares or to continue holding them and receive dividends as and when declared, participate in corporate actions, and benefit from exposure to the market value of Old Mutual ordinary shares.”

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The VFEX was established to be an “anchor tenant”, a signal to investors that Zimbabwe is willing to create a fenced-off, internationally orientated set of rules for selected activities, even when the domestic economy is in turmoil.

Old Mutual, worth about R60bn on the JSE, has had a presence in Zimbabwe for about a century, beginning with regional sales operations established in Salisbury (now Harare) in 1927.

One of Old Mutual’s success stories in Zimbabwe was the launch of its fintech proposition in the country, O’mari.

Old Mutual launched O’mari — which offers mobile money services, insurtech, investech, digital lending, e-commerce, payments, and digital products and services for the retail mass market in Zimbabwe — at end-May 2023.

The launch ratcheted up fintech competition in that country, which is dominated by Econet’s EcoCash and Innbucks.

Old Mutual has not been shy about pulling out from unprofitable markets when it sees signs of sustained distress.

The group has exited the likes of Nigeria and Tanzania.

Group CEO Jurie Strydom has talked tough on capital allocation, saying the group will invest in areas where it sees a return on investment.