Anglo-South African insurer Old Mutual is setting aside five billion rand (US$560 million) to fund expansion in fast-growing sub-Saharan Africa.
Old Mutual, which last year bought the life insurance unit of Nigeria’s Oceanic Bank, plans to buy minority and majority stakes in businesses in East and West Africa over the next three to five years, it said last week.
The company, which reported higher-than-expected profit, said it wanted to cash in on growing demand for insurance across the region as rapid economic growth, fuelled in part by the natural resources boom, increases consumer spending.
“We believe that the prospects for growth in Africa are underpinned by sustainable, structural factors,” Old Mutual said, adding that the continent’s economic output was forecast to have quadrupled to US$2 trillion between 2000 and 2012.
Old Mutual, which owns insurance, banking and fund management businesses across four continents, said adjusted operating profit for 2012 rose 18% to US$2,43 billion, narrowly beating the £1,57 billion expected by analysts in a company poll.
The improvement was driven by a strong performance from Nedbank, Old Mutual’s majority-owned banking business, where profit rose by nearly a quarter to £828 million, and good growth at its emerging markets businesses.
Old Mutual’s asset management unit in the United States took in £900 million of client money during the year compared with an outflow of £3 billion in 2011, its first positive annual inflow since 2007.
The company, which last year deferred plans to float the US asset management business, said the unit was not yet ready to go public.
“It hasn’t got to the state where it would be value-enhancing to do an IPO,” chief executive, Julian Roberts said.
Old Mutual’s London-listed shares have almost doubled over the last three years, beating a 22% gain for the FTSE 100 share index, as it sold businesses to repay debt and dispel investor worries that the group lacked focus and would be worth more broken up.