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Old Mutual Wealth’s client inflows rise as parent works on break-up

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(Reuters) – Financial services group Old Mutual Plc’s UK asset management business reported its higher ever quarter for client inflows and funds under management for the first three months of the year, citing increased demand for its services and platform.

Old Mutual Wealth forecast that markets would remain volatile and challenging in the medium term, especially until the outcome of Britain’s June general election and more detail of the terms of the country’s exit from the EU were known.

The business’s net client cash flows, excluding Old Mutual Italy and the South African branches, rose 59 percent to 2.7 billion pounds ($3.5 billion) in the quarter ended March 31.

Its comparable funds under management jumped 6 percent to 122.3 billion pounds, Anglo-South African parent Old Mutual said in a statement on Friday.

“We have the right solutions for these uncertain times, particularly our multi-asset, absolute return and high alpha product ranges… We are hopeful that this momentum will continue throughout 2017,” the unit’s CEO Paul Feeney said.

In March, Old Mutual said it was on track to complete its break-up into four parts by the end of 2018, although improvements to IT systems at Old Mutual Wealth could take longer and cost more than expected.

($1 = 0.7752 pounds)

 

(Reporting by Esha Vaish in Bengaluru; Editing by Adrian Croft)

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Libya’s Sharara, El Feel oilfields restart after pipeline protest

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By Ahmad Ghaddar and Ahmed Elumami

LONDON/TRIPOLI (Reuters) – Libya’s Sharara oilfield has restarted after the end of protests by an armed group that had blocked pipelines there, National Oil Corp (NOC) chairman Mustafa Sanalla said on Thursday.

No details were immediately available about output at the field, which has a production capacity of nearly 300,000 barrels per day (bpd).

A Libyan oil source and a local official had earlier told Reuters production had resumed at the field, which is operated by state oil firm NOC with Repsol, Total, Norway’s Statoil and OMV.

Traders said the field restarted early on Thursday.

The oil source said El Feel oilfield, with a capacity of about 90,000 bpd, had also restarted. El Feel and Wafa field condensate make up the Mellitah blend which is exported from Mellitah terminal operated by NOC and Italy’s ENI.

Sanalla, speaking on the sidelines of an industry event in Paris, said Libyan oil production was about 491,000 bpd on Thursday and NOC hoped to reach 800,000 bpd soon.

He said NOC still planned to reach a production target of up to 1.1 million bpd by August, a goal that will receive a boost from the resumption of output from Sharara.

NOC said in a statement later it had agreed to lift a force majeure on Sharara oilfield, and production at the field would reach 200,000 bpd. It was not immediately clear when the lifting of the force majeure would come into effect.

El Feel oilfield production would reach 80,000 bpd, it said.

News about restarting Sharara and El Feel weighed on crude prices, pushing Brent crude futures around 1.5 percent lower to $51.04 a barrel at 1645 GMT. Investors are worried by oversupply in the market.

Oil security in Libya remains fragile and attempts to negotiate with groups that periodically block and close down pipelines to make political demands have fallen through in the past as rival factions compete for power.

Mohamed Almahdi Alnajeh, a member of the local Zintan region elders council, told Reuters it had reached a negotiated deal with the group blocking the Sharara pipeline to end the protest. The protesters were told to take demands to NOC, he said.

The Sharara blockade was the latest in a series of disputes. Protesters blocked a pipeline leading from Sharara in March. The protests ended in early April but resumed a week later, halting NOC’s plans to raise production there to 270,000 bpd.

Libya’s oil production has been hit by protests, Islamist militant attacks and fighting among rival military factions since the fall of Muammar Gaddafi in 2011 sent the country spiraling into turmoil.

Before the civil war, Libya produced 1.6 million bpd.

(Additional reporting by Julia Payne in London and Alex Lawler in Paris; Writing by Patrick Markey; Editing by Edmund Blair and Mark Potter)

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Strike over pay at South African Airways grounds over 30 flights

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JOHANNESBURG (Reuters) – South Africa’s state-owned airline South African Airways cancelled at least 32 flights on Wednesday and has said that number could grow because of a cabin crew strike.

Cabin crew at SAA went on strike in early hours of Wednesday over pay, the main union at the state-owned carrier said, disrupting domestic flights and international flights.

Twenty eight of the flights cancelled were destined for domestic destinations within South Africa, while the rest were external flights, a South African Airways (SAA) official said.

The carrier also said some flights had been delayed.

“We’re talking about a substantial amount of revenue that has been lost in only half a day,” SAA spokesman Tlali Tlali said in a video posted on the eNCA television channel’s Twitter feed.

“We’re hoping to get labour to sit down with us … so we can get everyone back to work, so that in the evening we are able to operate our international and regional flights,” Tlali said.

The South African Cabin Crew Association (SACCA) said its nearly 1,400 in-flight staff would stop work indefinitely.

SAA said the strike had delayed flights out of O.R. Tambo Airport in Johannesburg, which handles around 19 million passengers a year, and would also affect flights from its coastal airports.

Zazi Nsibanyoni-Anyiam, president of the SACCA union, told Reuters that the workers, who represent around 80 percent of SAA’s cabin crew, had not received pay increases for six years.

“We will be here until the company puts an offer on the table. We think what we are asking for is reasonable,” Nsibanyoni-Anyiam said from a picket outside O.R. Tambo Airport.

SAA, which is technically insolvent and reliant on government debt guarantees of almost 20 billion rand ($1.52 billion), has been singled out by rating agencies as a threat to the country’s credit status, which was recently downgraded to “junk” by two of the big-three ratings agencies.

($1 = 13.1375 rand)

 

(Reporting by Mfuneko Toyana; Editing by James Macharia and Jane Merriman)

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Tanzanian gold miner Acacia to review operations if export ban persists

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LONDON (Reuters) – Tanzanian gold producer Acacia Mining will have to review its mining operations if the government’s ban on gold and copper ore exports remains in place, a senior executive said on Thursday.

Shares in Acacia, which is majority owned by Barrick Gold, briefly touched a six-week low, paring losses by 0900 GMT to trade down 3.7 percent after it said first-quarter core profits rose 25 percent to $82 million but cashflow was reduced by $36 million in part due to the ban.

The government halted the export of unprocessed ore on March 3, following President John Magufuli’s call for the construction of more gold smelters in the country, Africa’s fourth-largest gold producer.

“If we get to a point where it’s a pure stalemate and we don’t see that dialogue there, then we are going to have to re-appraise,” Chief Financial Officer Andrew Wray told Reuters, adding that negotiations continued.

“We are making contingency plans in the background of what we would need to do if we can’t resolve this.”

Non-essential spending in the quarter was pushed back in response to the ban and the company would have to “really take stock if it makes sense to continue producing given the cash burn”, Wray said.

The company has offered to fund a study on whether it could afford to build a smelter in Tanzania after a study in 2011 found there wasn’t sufficient ore volume in the country to justify it.

The export ban effects two of its three mines and the company said it would reassess the ongoing operation of both operations “over the coming weeks”.

“Clearly the message to the government is to sort this out or people are going to lose jobs (and the government royalties),” Investec analysts said in a note.

The company is also facing a tax audit and VAT refunds have not been received.

Acacia’s gold production in the first quarter totalled 219,670 ounces but sales were lower by 34,926 ounces.

However, Tanzania’s biggest gold producer stuck to its full-year production targets, as its mines continue to operate normally and stockpile its ore while negotiations continue with the government.

Acacia said in February it expects production this year to be between 850,000-900,000 ounces, up from about 830,000 ounces last year.

A technical committee appointed by President Magafuli is expected to report back in the next few days, Wray said.

 

(Additional reporting by Sanjeeban Sarkar in Bengaluru; Editing by Greg Mahlich)

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S.Africa finmin dismisses adviser’s nationalisation call, seeks to calm investors

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PRETORIA (Reuters) – South Africa’s finance minister dismissed calls from one of his own advisers for the nationalisation of banks and mines on Wednesday, and acknowledged that investors had been unsettled by turmoil surrounding his ministry.

Malusi Gigaba, appointed in an abrupt resuffle late last month that shook markets and prompted two ratings downgrades, told journalists he needed to reassure investors as he prepared to fly out to an IMF meeting in the United States.

President Jacob Zuma’s decision to sack Gigaba’s respected predecessor Pravin Gordhan hammered the rand and triggered protests by pro-democracy activists and opposition parties.

Uncertainty over the government’s fical policy rose again over the weekend when one of Gigaba’s advisers, Chris Malikane, wrote an opinion piece in South Africa’s Sunday Times backing the nationalisation of mines, banks and insurance firms.

Gigaba said the article by the economics professor at Johannesburg’s University of the Witwatersrand did not represent government policy.

“The technical advice he provides will never detract from the policies of the (ruling) African National Congress which don’t entail the wholesale nationalisation of the mines, the insurance industries and the land,” Gigaba told journalists.

“The changes in the national executive announced on the 30th of March has left some of them (investors) concerned and we need to give that reassurance in terms of government policy. It was only changes in the national executive and not changes in government policy,” he added.

Fitch and S&P Global Ratings both downgraded South Africa to junk after Gordhan’s sacking. Gigaba reiterated on Wednesday that he would meet Moody’s to give the ratings agency assurances about government policy in a bid to avoid a third downgrade.

Some political figures in the opposition have called for nationalisation of mines, saying private companies have failed to spread wealth and control of the economy beyond a small black elite and the white minority that ran the country under apartheid.

(Reporting by Olivia Kumwenda-Mtambo; Writing by James Macharia; Editing by Andrew Heavens)

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South Africa’s Shoprite looks beyond Africa to Eastern Europe

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By TJ Strydom and Wendell Roelf

CAPE TOWN (Reuters) – Africa’s biggest grocery retailer Shoprite is considering a push into Eastern Europe, where it hopes to use knowledge gleaned from former suitor Steinhoff International, its new CEO told Reuters.

The move signals a change in strategy for Shoprite under Chief Executive Pieter Engelbrecht, 47, as sovereign rating downgrades and a weak economy cloud prospects at home. It also leads it down a competitive path crowded with established retail giants such as Tesco, Carrefour, Lidl and Aldi .

Engelbrecht, who took over from 37-year veteran Whitey Basson in January, said the company wants to enter markets in Eastern Europe that either “have low competition or high economic growth”.

Shoprite has grown rapidly over the past two decades as shoppers from Lagos to Luanda increasingly shunned street markets and spent more of their wages in formal retail stores, but still less than 20 percent of its sales are outside its home market.

“We will look at other developing countries. That is also something that came out with our Steinhoff discussions and they’ve got good presence there, so we would like to leverage off that knowledge and definitely have a look at the East Bloc countries,” he said in an interview at the company’s head office outside Cape Town.

Steinhoff in February called off a plan to merge its African clothing and furniture assets with Shoprite’s stores, a deal bankers had said could create a giant valued at more than 180 billion rand ($13 billion).

“The two types of entry countries that you look at is either one with low competition or you look at one with high economic growth,” he said, adding that a trip to the region was planned although he did not say which countries he was considering.

“We will go slow. We are not going to over commit ourselves to learn if the market accepts us. So we will first establish a couple of stores and make sure the market likes us, and if we find acceptance then one can look at a merger or acquisition.”

However, a move to Eastern Europe would be fraught with risks and would not likely provide the profits necessary to offset the impact of reducing its exposure to the impact of credit ratings downgrade on South Africa, analysts said.

“So whatever ratings uplift one can expect from reducing South African exposure, might well be given up on lower profit margins and execution risk from such an acquisition,” said Unathi Loos, an Investec Asset Management retail analyst.

But Shoprite’s experience in selling to low income earners in far-flung cities across Africa could help it mount a strong challenge.

The company is also pondering a move into the South American market, Engelbrecht said.

SOUTH AFRICA

Engelbrecht, a chartered accountant who – before a serious neck injury – had dreams of playing rugby professionally, said Shoprite was maintaining sales and customer growth in South Africa and should reach its profit targets this year, but was concerned that a weaker rand currency could hurt consumers.

South Africa’s rand was the worst performing emerging market currency this month, retreating more than 10 percent against the greenback, as the shock of a midnight cabinet reshuffle and subsequent credit ratings downgrade weighed on sentiment. [

Engelbrecht said Shoprite had a strong balance sheet to help weather the volatile rand and was talking to banks to raise between 10 billion and 15 billion rand for its capital requirements over the next six years.

Though raising funds in South Africa is likely to be more costly due to the downgrades, Shoprite can still tap foreign markets through its structures in Mauritius.

And raising funds in Eastern Europe could be significantly cheaper than in South Africa, analysts said.

($1 = 13.6146 rand)

(Editing by Louise Heavens and Susan Thomas)

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South Africa’s finmin Gigaba committed to fiscal consolidation after downgrades

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JOHANNESBURG (Reuters) – South Africa’s new Finance Minister Malusi Gigaba said on Wednesday Treasury is committed to fiscal consolidation plans outlined in the 2017 budget after S&P and Fitch downgraded the country to sub-investment grade.

Speaking to local investors at the Development Bank of South Africa, Gigaba said the Treasury aims to stabilise the government’s net debt over the next three years at 50 percent of gross domestic production (GDP).

“To accomplish this we are tightly controlling expenditure,” Gigaba said.

“Fiscal sustainability is a prerequisite for inclusive development … we are therefore committed to the fiscal consolidation plans as outlined in the February budget.”

Last week Fitch downgraded South Africa’s foreign and local currency debt to speculative grade, while S&P Global Ratings cut the hard currency borrowing to “junk”. Both cited likely changes in economic policy after a cabinet reshuffle.

Gigaba reiterated that South Africa’s controversial nuclear-build programme will be implemented “at a pace and scale that the country can afford” in brief remarks to reporters.

“Any procurement of nuclear energy will follow due process,” Gigaba said.

Critics of the expansion plan have raised questions about environmental risks and costs, estimated at 1 trillion rand ($73 billion), saying the country can ill afford the project.

State-utility Eskom said on Sunday if all processes go well, it will issue a request for proposals around June.

South Africa, which has Africa’s only nuclear power station, wants atomic power to play the leading role in expanded power generation, easing the country’s reliance on an ageing fleet of coal-fired plants. It has asked Eskom to procure an additional 9,600 megawatts (MW) of capacity.

($1 = 13.7435 rand)

 

(Reporting by Mfuneko Toyana; Writing by Nqobile Dludla; Editing by James Macharia)

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Anglo American sells Eskom-linked coal operations in South Africa

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JOHANNESBURG (Reuters) – Miner Anglo American will sell its Eskom-linked thermal coal operations in South Africa for $166 million, it said on Monday, part of a strategic overhaul announced a year ago to cope with a slump in commodity prices.

The mines, along with four closed collieries, have a supply agreement with Eskom under which South Africa’s sole power utility paid for their running costs in exchange for coal supply at a pre-set price.

The company said it will sell the assets — New Vaal, New Denmark and Kriel collieries — to Seriti Resources Holdings – a company led by Mike Teke, the president of the local mining industry lobby group, Chamber of Mines.

Anglo was hit hard by a slump in commodity prices in 2015, prompting it to launch a sweeping overhaul to slim down its portfolio and focus on diamonds, platinum and copper.

“This transaction forms part of our ongoing commitment to reshape and upgrade our global asset portfolio,” Anglo Chief Executive Mark Cutifani said in a statement.

($1 = 13.8200 rand)

 

(Reporting by Rahul B in Bengaluru and Tiisetso Motsoeneng in Johannesburg; Editing by Louise Heavens/Keith Weir)

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South Africa’s Zuma recalls Gordhan from international roadshow, rand falls

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By Mfuneko Toyana and Sujata Rao

JOHANNESBURG/LONDON (Reuters) – South African President Jacob Zuma asked Finance Minister Pravin Gordhan on Monday to return home “immediately” from an investor roadshow abroad, reviving talk of a cabinet reshuffle and unnerving investors who see Gordhan as an emblem of stability.

The rand fell more than 3 percent against the dollar, its biggest one day fall since Nov. 10, South African bonds tumbled and banking shares slid more than 3 percent after Zuma’s office said Gordhan had been recalled. It did not give a reason, but a government source said the presidency had not given permission for the trip.

The decision comes a day before a court is due to rule on a request by Gordhan for a declaratory judgment that he cannot interfere with decisions by banks to cut ties with businesses owned by the Gupta brothers, who are friends of Zuma.

“Zuma has instructed the Minister of Finance, Mr Pravin Gordhan, and Deputy Minister Mcebisi Jonas to cancel the international investment promotion roadshow to the United Kingdom and the United States and return to South Africa immediately,” a statement from the president’s office said.

Business executives and union leaders had accompanied Gordhan to London to woo potential investors for whom he is a reassuring figure given South Africa’s weak economic growth and tensions within the ruling African National Congress (ANC) that have put its investment-grade credit rating at risk.

Fraud charges brought against Gordhan and then dropped last year, prompting accusations of a political “witch-hunt”, badly rattled financial markets, as did rumours before last month’s budget speech that he might be moved from the Treasury.

Speaking in London, Gordhan — who the Treasury said will return to South Africa on Tuesday — said he was “just asked to come back”. Asked if he expected a cabinet reshuffle, Gordhan said: “That’s the boss’s prerogative.”

Koon Chow, emerging debt strategist at Swiss asset manager UBP, said Gordhan was jovial and relaxed at Monday’s roadshow.

“He knows investors like him and he likes us,” said Chow. Asked why he was being called back to South Africa, “he said ‘I do what my boss tells me'”, Chow added.

UNCERTAINTY

The main opposition Democratic Alliance said the decision to recall Gordhan “is so bizarre that it appears, at best, calculated to humiliate the minister or, at worst, to suggest that the minister is about to be fired”.

The ruling ANC meanwhile said the decision had not been discussed at its weekend meeting.

South Africa’s banking industry association said Zuma’s order risked a sovereign credit rating downgrade, while the cost of insuring South African government debt against default hit its highest level in nearly seven weeks.

Jabulane Mabuza, head of Business Unity South Africa and chairman of Telkom, who was with Gordhan in London, said in a text message: “At this point only presidency can give clarity on the why.”

Mabuza said Gordhan and his team had met about 60 asset managers in London and had planned to meet some 200 investors with a total $10 trillion in assets under management during the non-deal roadshow.

Gordhan first served as finance minister from 2009 to 2014 and was reappointed by Zuma in December 2015 to calm markets spooked by the president’s decision to replace respected finance minister Nhlanhla Nene with a little-known politician.

But South African media reports suggest Zuma and Gordhan have an uneasy relationship, though the president has denied suggestions he is “at war” with his finance minister.

“I believe today could be a test of the water to undertake a reshuffle,” said Peter Attard Montalto, an emerging markets analyst at Nomura in London.

Some pundits say Gordhan is the target of political pressure from a faction allied to Zuma, which has criticised his plans to rein in government spending as the economy stagnates and also rapped his running of the tax agency. Gordhan has wrangled for months with the head of the agency.

MARKET MOVES

A Pretoria court is due to hear on Tuesday Gordhan’s request for a declaratory judgment that he cannot interfere with decisions by South Africa’s major banks to cut their ties with businesses owned by the three Indian-born Gupta brothers.

Gordhan has said the brothers have repeatedly asked him to intervene to have their accounts reopened.

Allegations that the Guptas wielded undue influence over Zuma were investigated last year by the Public Protector, a constitutionally mandated anti-corruption watchdog. Zuma has said the Guptas are his friends, but denies anything improper about the relationship.

Africa’s most industrialised economy faces credit rating reviews in April and June that could see it slip into “junk” territory because of sluggish growth and political uncertainty.

“Today’s market moves underline the importance of Mr. Gordhan to investor confidence in South Africa,” Capital Economics Africa economist John Ashbourne said in a note.

“And even if the minister is not removed, today’s events show that President Zuma is totally unconcerned with the effect that his often erratic policymaking style has on markets.”

(Additional reporting by Ed Cropley, Ed Stoddard, Olivia Kumwenda-Mtambo, Joe Brock in Johannesburg, Wendell Roelf in Cape Town, Marc Jones and Karin Strohecker in London; Writing by James Macharia; Editing by Catherine Evans)

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Kenya launches phone-based bonds, tapping pool of small investors

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By Duncan Miriri

NAIROBI (Reuters) – Kenya began selling its first mobile-phone-based government bond on Thursday, part of an ambitious plan to broaden the pool of investors in government securities.

The government is initially making a limited offer of 150 million shillings to test the system before a bigger offer in June, Finance Minister Henry Rotich said.

Governor Patrick Njoroge said the bond, called M-Akiba, allows people to invest as little as 3,000 Kenyan shillings ($29.20).

“This is a product that will dramatically improve the savings culture of our people,” he said.

Treasuries in other emerging economies will be watching with interest. Most would like to broaden their sources of borrowing beyond local banks and international financial institutions.

Kenya pioneered the use of mobile money in 2007 with M-Pesa, a money transfer service, by telecoms operator Safaricom.

The M-Akiba bond will be offered on M-Pesa and similar mobile-phone financial services by other firms. Investors will be able to buy the bond through their phones, where a record of their holdings will be stored. Coupon payments will also be made through the phone.

M-Pesa allows users to transfer cash and make payments on even the most basic mobile phone. In partnership with local banks, Safaricom has since expanded the service to offer savings, lending and insurance products.

($1 = 102.7500 Kenyan shillings)

(Writing by Katharine Houreld, editing by Larry King)

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