Old Mutual Ltd. Considers Proposal to Allow Sale of Frozen Zimbabwean Shares

Old Mutual Ltd. is currently mulling over a proposal that could potentially offer a relief to Zimbabwean shareholders who have had their shares frozen for over four years. The proposal aims to provide an option for these investors to sell their suspended shares, allowing them to finally access the value tied up in them.

These shares, which have been on hold since June 2020, were initially suspended due to their alleged role in exacerbating Zimbabwe‘s currency crisis. The Zimbabwean investors could soon have the opportunity to sell their shares on the stock exchange in Johannesburg, as per the plan initiated by Zimbabwean authorities.

The Fund Managers Association of Zimbabwe’s chairman, Shelton Sibanda, mentioned that this proposal would allow Zimbabwean investors a one-time chance to liquidate their shares on the Johannesburg market.

Old Mutual Ltd., a renowned South African insurer, has around 30,000 Zimbabwean shareholders, including various entities such as pension funds, banks, property companies, and retail investors. The company not only deals in insurance but also offers banking services through Central African Building Society Ltd., besides being a major property holder in Zimbabwe.

According to Sibanda, the Zimbabwean shareholders would have their shares moved to the Johannesburg register for trading, and the funds from the sale would be repatriated in accordance with exchange-control regulations.

Despite this proposal not being seen as the optimal solution, Sibanda highlighted that it serves as a compromise to help alleviate the financial strain on pensioners and other stakeholders who have been impacted by the suspension of these shares.

The Zimbabwe dollar’s inflation spiral and subsequent crash led to the freezing of Old Mutual shares in the country, with authorities attributing them to the local currency crisis. This situation even gave rise to the «Old Mutual Implied Rate» (OMIR), a measure used in transactions that was calculated based on the Harare share price relative to foreign stock exchanges.

Old Mutual has consistently denied any misconduct related to this matter. Although the shares saw a 1.3% increase in trading on the Johannesburg stock exchange, they have experienced a 6.1% decline this year.

Once highly coveted on the Zimbabwe Stock Exchange, the Old Mutual shares have now become virtually worthless due to their suspension, as noted by Lloyd Mlotshwa, the head of research at Harare brokerage IH Securities.

It is a situation where the held shares are non-negotiable, resulting in no value realization for the holders, making it a challenging scenario for stakeholders involved.