(Alliance News) - Old Mutual Ltd will start buying back up to ZAR1.5 billion worth of its own shares from Tuesday, in a bid to boost shareholder value.
The Anglo-South African financial services firm first announced its share repurchase in March.
It said the buyback commence on Tuesday and will continue until the ZAR1.5 billion maximum amount is reached. This ZAR1.5 billion target limits the repurchase programme to 3.5% of the issued share capital. It has 4.91 billion shares in issue.
The group said the acquisition of its own shares will take place on the Johannesburg Stock Exchange only. It is also listed on the London Stock Exchange.
Old Mutual has approval from the South African Reserve Bank's Prudential Authority for the buyback until the financial year ending December 31.
The group believed that it is trading at a discount to its intrinsic value and is of the view that a share repurchase programme will deliver longer term incremental value to shareholders.
"The management team remains committed to following a disciplined trading approach under the share repurchase programme and will only repurchase shares to the extent that market conditions are favourable," the financial services firm said.
The repurchased shares will be cancelled as issued shares and will revert to authorised but unissued share capital status.
Old Mutual shares rose by 1.7% to ZAR10.89 each in Johannesburg on Tuesday afternoon. In London, the stock was up 0.7% to 44.50 pence.
By Artwell Dlamini, Alliance News reporter
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Old Mutual Lim. (OMU)