Investors jittery as Old Mutual, Moyo uncertainty continues


Amid continued uncertainty at Old Mutual as Peter Moyo’s future as CEO hangs in the balance, investors are calling for an end to the impasse sooner rather than later.

"We just don’t know how it will end. It won’t affect the fundamentals [of the business] but in times of uncertainty, it’s not surprising to see the share price move," said Nick Crail, a fund manager at Ashburton Investments. 

Ashburton, the investment management branch of FirstRand, is one of the institutional shareholders of Old Mutual stock. He says he is concerned about the saga involving Moyo and the board that has been ongoing since May, when Moyo was suspended and subsequently axed. 

The JSE listed insurer has a market capitalisation of R92.8bn and made it to the Fortune 500’s 2019 Global 2000 list of the biggest companies at number 782. Old Mutual’s share price fell on Tuesday by 5.5% to R19.22 following a high court order for Moyo to be reinstated with immediate effect, pending another part of his legal application, which will be dealt with within approximately two months' time.

This represented the lowest level since the company split into four separate units in June 2018. Old Mutual has since filed notice to appeal and maintains this suspends the implementation of the court order and Moyo cannot report for duty.

Moyo's legal representation, however, disputes this and Moyo arrived at work a day after the ruling. While there was a plan for the respective legal teams to meet on Wednesday, Old Mutual called it off a few minutes before it was due to start and said that no meeting would take place. There has been no further update on the matter.

Simon Brown, Founder and director of investment website, said the Old Mutual share price had fallen some 10% in the last two weeks. He does not own any of the company’s shares.

Shareholders not happy

"Shareholders cannot be happy with the situation in that firstly, this is costing the company in legal fees and secondly there remains no permanent CEO to run the company in trying times," Brown commented. Old Mutual’ s share price fell a further 0.1% on Wednesday to trade at R19.19 at 16:12. The JSE Fin15 was down 0.4% on the day. Crail said investors are hoping for a resolution because once the courts are involved, "it becomes messy".

However, both Old Mutual and Moyo deny there is any kind of talks taking place for a "golden handshake" for the CEO who took office in June 2017, and has four and a half more years on his contract.

"I doubt the share price will go back to previous levels until it reaches more certainty," Crail added.

Business as usual

The insurer tried to calm investors with a statement, saying it would be business as usual and a future working relationship with Moyo would be "untenable".

"Old Mutual appeals to all its stakeholders not to be distracted by the ongoing court proceedings as they are not affecting the business from an operational perspective and the matter will be finally determined by an appeals process," the insurer said in a statement.

Moyo also said the fundamentals of Old Mutual remain in place, while he fights it out with the board.

"It’s a very good company, I think we must actually separate the doings of individuals and the doings of the company… this company has got over 30 000 employees who actually come here every day to do very, very good work," Moyo said, before exiting the building on Wednesday afternoon.         

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