South Africa’s prodigal insurer returned home to a luke warm welcome on Tuesday.
Old Mutual Ltd. started trading its stock in Johannesburg at 28.50 rand before swinging between 28.20 rand and 29.39 rand. The listing — done in conjunction with others in Namibia, Malawi and Zimbabwe — brings an end to a global acquisition spree that took its former parent Old Mutual PLC from its Cape Town roots to London, New York, Beijing and even Bogota.
From 2001 through 2011, Old Mutual owned a major U.S. life and annuity issuer, Fidelity & Guaranty Life.
The 173-year-old insurer on Monday spun off U.K. wealth manager Quilter PLC and has sold its U.S. asset manager and Latin American units after concluding the divisions would be worth more on their own. That left Old Mutual Ltd. with its former parent’s African insurance, asset management and banking businesses, while also drawing to a close Old Mutual PLC’s 19-year listing on the London Stock Exchange.
(Related: FGL Set to Issue $550 Million in Notes)
The share price isn’t yet reflecting the “value unlock” Old Mutual hoped to achieve, said Renier de Bruyn, an investment analyst at Sanlam Private Wealth. Still, this means the stock is trading at an “attractive” price-to-earnings ratio of 7.5 times, he said. That compares with a historical P/E of 13 for Sanlam Ltd., its biggest South African rival.
Almost 2.4 million Old Mutual Ltd. shares had traded by 10:47 a.m. in Johannesburg, more than three times the volumes seen in Sanlam, MMI Holdings Ltd. and Discovery Ltd., with the securities priced at 28.60 rand.
The break up serves as a reminder that Old Mutual PLC could never really shed its African heritage. The South African business continually accounted for the bulk of earnings despite an acquisition spree which included the purchase of Stockholm-based Skandia AB for about $8 billion in 2006 and Boston-based United Asset Management Corp. for $1.4 billion in 2000.