Old Mutual begins ZAR3 billion share buyback to tackle discount

(Alliance News) - Old Mutual Ltd said on Friday it will immediately start its ZAR3 billion share buyback in an attempt to erase the discount in its share price.

This comes after shareholders late in May gave the Anglo-South African financial services firm the go-ahead to repurchase up to 10% of its

issued shares.

Shares in Old Mutual shares were down 0.9% to ZAR12.70 on Friday afternoon in Johannesburg, while they were down 1.1% at 55.00 pence in London. Old Mutual has a market capitalisation of around ZAR60.33 billion.

On Friday, the company said it will implement the share repurchase of about 220 million shares for around ZAR3 billion from Friday until the approved authorised limit is reached or "for as long as the programme remains value accretive to shareholders".

The group said it has obtained the necessary regulatory approval from the Prudential Authority in South Africa, and stressed that its latest share will take place on the Johannesburg Stock Exchange only.

Old Mutual said it believes that its shares are trading at a discount to its intrinsic value and is of the view that a repurchase programme will deliver "longer term incremental value" to its shareholders.

Late in January, Old Mutual completed another share buyback plan that saw it repurchase 78.0 million shares.

By Artwell Dlamini, Alliance News senior reporter South Africa

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Old Mutual Lim.