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Old Mutual says could dual-list wealth, emerging markets units

28 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

LONDON (Reuters) – Old Mutual said on Tuesday its preferred option after splitting into four would be to have two of the new companies listed on both the London and Johannesburg stock exchanges.

The Anglo-South African company expects to complete its restructuring by the end of 2018.

The changes include carving out its emerging markets operations to create a new South African holding company and a company that would mainly comprise the group’s wealth operations.

Chief Executive Bruce Hemphill said the firm had also received approaches for its businesses from industry and private equity players.

“We are still going through a process,” he told Reuters by phone. “We have settled on a preferred route, (but) that does not preclude the possibility of someone coming along with an offer.”

Old Mutual Wealth was valued by analysts earlier in the year at 3-4 billion pounds ($4.01-$5.35 billion).

Hemphill said despite recent market fluctuations following last week’s referendum vote for Britain to leave the European Union, Britain was still a “sure bet” in the longer term.

He declined to comment on the sale of Old Mutual Wealth’s Italian unit, which has attracted four private equity bidders in its final stages, sources told Reuters last week.

But he said Old Mutual was going through a process of “cleaning up” the Italian wealth business.

The firm said it plans to distribute a “significant proportion” of its stake in Nedbank Group Ltd to the shareholders of the new South African holding company.

The FTSE 100-listed company also said it plans to continue cutting its 65.8 percent stake in U.S. asset management firm OMAM.

Old Mutual said it faces headwinds from weakness in the South African rand and from lower equity markets, but said gross sales in the year had been strong.

Old Mutual shares were up 4.6 percent to 186.3 pence at 0826 GMT in line with a bounce in financial stocks following a severe sell-off this week.

Old Mutual will hold its annual general meeting on Wednesday, along with an extraordinary general meeting where shareholders will vote on Hemphill’s proposed 1,000 percent bonus.

($1 = 0.7483 pounds)

 

(By Noor Zainab Hussain and Carolyn Cohn. Reporting by Noor Zainab Hussain in Bengaluru; editing by Sunil Nair and Jason Neely)

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South African black lobby disappointed by MTN’s new white CEO

23 June 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

JOHANNESBURG (Reuters) – South Africa’s Black Management Forum (BMF) said it was disappointed by the appointment of white South African Rob Shuter as MTN Group’s new CEO and viewed it as a serious blow to giving blacks a larger role in business.

The forum, which lobbies for black rights, criticised the mobile phone operator’s decision saying it was retrogressive to plans for the inclusion of blacks in corporate boardrooms in Africa’s most industrialised country.

Shuter was named on Monday as the replacement for Sifiso Dabengwa, a black executive who resigned last November after Nigeria imposed a fine on MTN for failing to deactivate more than five million unregistered SIM cards.

“There is a general unwillingness for transformation at top management level which has resulted in the decline in the number of black South African CEOs,” BMF President Mncane Mthunzi said in a statement. “These companies are owned by the public and yet they don’t reflect the demographics of our society.”

MTN spokesman Chris Maroleng had no immediate comment but said the company would respond later via an emailed statement.

Founded with the government’s help after the end of apartheid in 1994, MTN has been touted as one of South Africa’s biggest corporate success stories with operations in more than 20 countries in the Middle East and Africa.

Since coming to power at the end of white minority rule, the African National Congress party has pushed for change in the complexion of the civil service, the military and state-owned firms, as well national sports teams and private businesses.

The push has helped many South Africans who were excluded from the mainstream economy under apartheid and created a solid black middle class.

MTN executive Phuthuma Nhleko, also black, was appointed interim executive chairman following Dabengwa’s resignation, with an eye to renegotiating the Nigerian fine which was initially set at $5.2 billion.

In the end, MTN agreed this month to pay a 330 billion naira fine ($1.2 billion) and to list its local business on the Nigerian Stock Exchange. MTN is the largest mobile phone operator in Nigeria with 62 million subscribers and the country accounts for about a third of its revenue.

Nhleko will revert to his role as non-executive chairman when Shuter starts as CEO, which is expected to be by July next year at the latest. Shuter, who has a background in risk management, will be joining MTN from rival mobile operator Vodafone, where he is currently head of Vodafone Europe.

($1 = 283.0000 naira)

 

(Reporting by Tanisha Heiberg; editing by James Macharia and David Clarke)

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South Africa’s Eskom raises wage offer to union to 7%: NUM

22 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South African power utility Eskom has raised its wage offer to 7 percent from 5.75 in negotiations with workers, the National Union of Mineworkers (NUM) spokesman said on Wednesday.

“NUM is going to seek a mandate from its members about Eskom’s latest offer, then we will respond to the management,” Livhuwani Mammburu said. The offer was still below NUM’s demand of a 15 percent increase for the least-paid workers.

The utility employs over 42,000 people with NUM representing more than 14,000 of workers.

 

(Reporting by Tanisha Heiberg; Editing by James Macharia)

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South Africa’s rand steady, caution prevails ahead of British referendum

22 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand pulled back from seven week highs against the dollar on Wednesday, with traders and analysts expecting caution to prevail on the eve of a British referendum on whether to remain in the European Union.

Domestic economic headlines have taken a backseat in moving the currency this week, although inflation data due out at 0800 GMT could boost it slightly if higher than expected, raising the prospect of higher interest rates this year.

At 0653 GMT the rand traded at 14.7290 to the dollar, not far off its previous close at 14.7350.

It was however down about 10 cents from Tuesday’s high of 14.6225, the rand’s strongest level since May 4 which came on the back of a rise in risk appetite as investors bet on Britain staying in the EU after Thursday’s vote.

“Optimism in financial markets ahead of the UK referendum has tempered ahead of the vote tomorrow,” Standard Bank said in a note.

Government bonds edged higher in early trade, with the yield for debt due in 2026 dipping 2 basis points to 8.97 percent.

The stock market’s Top-40 futures index was up 0.26 percent, signalling a slightly firmer start for the bourse at 0700 GMT.

 

(Reporting by Stella Mapenzauswa; Editing by Tiisetso Motsoeneng)

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South Africa’s Amplats warns H1 profit to fall at least 20%

21 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – Anglo American Platinum (Amplats) expects its half-year profit to fall by at least 20 percent due to weaker metal prices, the South African miner said on Tuesday.

Platinum prices have been hurt by growth concerns in China and oversupply worries which have forced firms to abandon projects and sell mines.

Amplats, which produces around 40 percent of the world’s platinum group metals, said it would make a further announcement once it had determined a likely range for its headline earnings per share.

Headline EPS, which strips out certain one-off items, is the main profit measure in South Africa.

Shares in Amplats were little changed at 379.09 rand, largely in line with the blue-chip JSE Top-40 index.

Amplats, a unit of global mining group Anglo American, is focusing on newer and more mechanised mines and removing unprofitable ounces following a record five-month strike in 2014.

Amplats, along with rivals Impala Platinum and Lonmin, is due to start wage talks with unions at the end of June, when the current deal expires.

The National Union of Mineworkers will demand pay increases of 20 percent per year for the next two years while demands from the larger Association of Mineworkers and Construction Union are not yet known.

 

(Reporting by Tiisetso Motsoeneng; editing by Jason Neely)

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Steinhoff buys Poundland stake ahead of possible takeover bid

15 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG/LONDON (Reuters) – South Africa’s Steinhoff has bought 23 percent of Poundland and is considering a full cash bid for the British no-frills homeware chain in its latest attempt to expand in Europe.

Steinhoff, a $22 billion furniture conglomerate which has lost out in two high profile takeover battles already this year, said on Wednesday it had acquired 22.78 percent of Poundland, which sells every item at a single price point of 1 pound.

Under UK takeover rules, Steinhoff has until July 13 to announce a firm intention to bid for all of Poundland, whose main shareholder had been private equity firm Warburg Pincus, which said on Tuesday it had sold down its 15 percent stake.

Steinhoff, which has lost out to rivals in two battles for Britain’s Home Retail and France’s Darty in the last three months, bought just over 61.2 million Poundland shares, which would be worth around 120 million pounds at the closing price. Poundland has a market capitalisation of around 537 million pounds ($761 million).

Poundland shares closed up 2.2 percent higher at 200 pence, after rising around 25 percent on Tuesday. The stock is still down about 7 percent so far this year.

News of the South African company’s latest move raised questions about its approach to expansion in Europe, where it already runs chains such as white goods retailer Conforama in France and furniture chain Harveys in Britain.

“There’s seem to be no obvious strategic fit but it might just be a matter of adding discounted chains to its stable because that’s essentially what they are: a discount retailer,” said Vestact’s Sasha Naryshkine in Johannesburg.

South African retail mogul Christo Wiese, Steinhoff’s chairman and biggest shareholder, told Reuters he was interested in Poundland because it would be a “good fit” for Steinhoff, adding it had a disciplined approach to acquisitions.

 

POUNDLAND PRESSURE

Steinhoff, which sells beds and cupboards to lower-income shoppers in Europe, southern Africa and Asia, is keen to expand further in Europe, where pressure on consumer income has made German’s Aldi the continent’s fastest growing supermarket chain.

Poundland, which is due to report annual earnings on Thursday, would give Steinhoff a company with more than 900 shops in Britain, Ireland and Spain but also one whose 1 billion annual sales have been under pressure.

Poundland’s 2015 purchase of rival 99p Stores for 55 million pounds has raised questions over its price model.

“Although Steinhoff has a proven track record of integrating businesses and improving their margins over time, we would see this acquisition as higher than average risk given the increasingly crowded UK variety discount space,” said RBC Europe Ltd’s analyst Richard Chamberlain.

Poundland, which competes with B&M, Home Bargains and Wilko and Bargain Buys, told shareholders to take no action, noting that there was no certainty an offer would be made.

Warburg Pincus originally listed Poundland in March 2014 at 300 pence per share.

($1 = 0.7059 pounds)

 

(By Tiisetso Motsoeneng and Freya Berry. Additional reporting by Wendell Roelf in Cape Town; Editing by Jane Merriman and Alexander Smith)

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South African rand on shaky ground after current account gap widens

15 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s rand stayed on the back foot against the dollar early on Wednesday a day after central bank data showed a wider-than-expected current account deficit.

By 0711 GMT the rand was at 15.2850 against the greenback, little changed from its New York close at 15.3040 in the previous session.

The local currency had fallen as much as 1.5 percent to its weakest in more than a week on Tuesday after the South African Reserve Bank said the current account deficit widened to 5 percent of GDP in the first quarter of this year 4.6 percent.

Government bonds edged higher, and the yield for the benchmark instrument maturing in 2026 eased 3 basis points to 9.17 percent.

South Africa relies heavily on portfolio flows to plug its current account shortfall, making the rand more vulnerable than its emerging market peers when risk appetite wanes.

“Local data this week has not provided any comfort for the local unit and this, long with markets bracing for a number of significant events, has seen the rand remain firmly under pressure,” Nedbank said in a market commentary.

Traders and analysts said markets were focused mainly on the U.S. Federal Reserve’s policy meeting later on Wednesday while the prospect of Britons voting to leave the European Union at a June 23 referendum had dampened risk appetite.

On the equity market, the JSE exchange’s All-Share index was up 1 percent in early trade, while the benchmark Top-40 index added 0.9 percent.

 

(Reporting by Stella Mapenzauswa; Editing by Andrew Heavens)

 

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South Africa’s finmin says robust institutions will help avert credit downgrade

10 June 2016 Comments (0) Africa, Latest Updates from Reuters, Politics

JOHANNESBURG (Reuters) – South Africa has robust institutions to help it avert a credit downgrade, Finance Minister Pravin Gordhan said on Friday, days after Fitch became the third major rating agency to uphold its investment grade status.

But he said that South Africa’s government must stick to its fiscal targets in the next five months and could not risk any pressure on the budget from debt-ridden state firms.

South Africa has also dodged cuts from Moody’s and S&P, but analysts said that downgrades could be in the pipeline by December amid an economic meltdown critics partly blame on mismanagement by President Jacob Zuma.

Speaking at a business forum, Gordhan said he had nothing to hide or worry about in relation to an investigation into a surveillance unit formed at the South African Revenue Service (SARS)‚ when he was its commissioner between 1999 and 2009.

Gordhan spoke two days after Fitch affirmed South Africa’s BBB- rating on Wednesday, a notch above “junk” status, but said low GDP growth posed a risk. [nL8N1901CW]

“Confidence plays a big part in whether we get investments going and business activity going in our country,” Gordhan said at online publication Daily Maverick’s “The Gathering”, a forum also addressed by a cross-section of political leaders.

“Confidence is also about building trust and building understanding and having a shared idea of where we want to take this country.”

Zuma rattled investors in December by changing finance minister twice in less than a week, triggering a run on the rand and bonds.

To calm markets, the president reappointed Gordhan to the post he held from 2009 to 2014.

An investigation by the elite police unit Hawks into the surveillance unit at SARS has however led to speculation that Gordhan does not enjoy Zuma’s political support. On Friday Gordhan said Zuma and the ruling African National Congress had issued statements assuring him and the National Treasury of their support, but hinted that it would not be easy to rebuild dented confidence in South Africa.

Gordhan’s comments did little to cheer the rand, which fell more than 2.1 percent against the dollar on Friday in what traders and analysts said was partly a correction after rallying to five week highs following the Fitch review.

Gordhan stressed the need to put policies in place that would support sectors like mining and boost the economy, which Treasury estimates would grow at most by 0.9 percent in 2016.

Data from the statistics agency this week showed GDP contracted by 1.2 percent in the first quarter, mainly due to an 18-percent slide in mining during the quarter.

“We need to stabilise sectors of the economy that find themselves in trouble, like mining,” Gordhan said.

 

(By Mfuneko Toyana. Writing by Stella Mapenzauswa; Editing by James Macharia)

 

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South Africa’s Transnet transports monthly record of manganese

8 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – South Africa’s Transnet Freight Rail moved a record number of manganese shipments in May due to new trains and improved market conditions, the company said on Wednesday.

Transnet Freight moved 1.053 million tons in May from a previous high of 976,671 tons in October 2015.

“The record-breaking performance is due to a significant improvement in efficiencies across the channels which were driven by the introduction of new locomotives among other things,” Transnet Freight Rail said in a statement.

State-owned Transnet plans to spend up to 390 billion rand ($26 billion) over ten years to expand and revamp railways, pipelines and ports in Africa’s most advanced economy, which is struggling with flagging growth.

More than 75 percent of the new locomotive railway fleet is used to move manganese, used as a component to keep steel from rusting. The company also moves coal, chrome and iron ore.

The company also said there was “an upturn in market conditions”. A company spokesman said the company able to move more volumes from mining companies.

($1 = 14.9650 rand)

 

(Reporting by Zandi Shabalala, editing by Louise Heavens)

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South Africa’s rand halts rally, GDP data, Fitch review keep market wary

8 June 2016 Comments (0) Africa, Business, Latest Updates from Reuters

JOHANNESBURG (Reuters) – The rand pulled back from the previous session’s four-week highs against the dollar on Wednesday and traders said South African GDP data expected to show a small contraction in the first quarter could add pressure on the currency.

The rand has gained as much as 5 percent against the dollar since Friday, reaching 14.7995 on Tuesday in a relief rally prompted by S&P’s decision to maintain South Africa’s investment grade BBB- rating.

The currency however gave back some of those gains on Wednesday to trade at 14.9175/dollar by 0650 GMT, down 0.1 percent from the previous session’s close.

Traders saw a risk to the currency from Statistics South Africa’s GDP data due out at 0930 GMT, with economists polled by Reuters expecting the economy to have shrunk 0.1 percent on a quarter-on-quarter annualised basis in the first three months of the year.

“If this is indeed the case there is not much chance the rand will be able to continue its journey lower (firmer),” Standard Bank trader Warrick Butler said in a note to clients.

Another rand-moving headline could be a review from Fitch, which is also expected to retain its own BBB- rating on Africa’s most industrialised economy, although it could change the outlook to negative from stable.

Fitch has not set a date for its announcement, but the Treasury has said it expects it on June 8.

In fixed income on Wednesday, the yield on debt maturing in 2026 was flat at 9.1 percent.

The JSE securities exchange’s Top-40 futures index was down 0.4 percent, pointing to a slightly weak start for the local bourse at 0700 GMT.

 

(Reporting by Stella Mapenzauswa; Editing by Ed Stoddard)

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