Old Mutual puts US$14m into diversifying portfolio
Diversified financial services group Old Mutual Zimbabwe says it deployed US$13,7 million into alternative investments that include renewable energy, agriculture and real estate, as part of the group’s cash flow expansion and diversification drive.
Group chief executive Samuel Matsekete, said the country’s economic sectors held opportunities to be extracted for the benefit of the company and economy.
“We made an investment in real estate in Ngezi that houses equipment that processes gold and platinum, and that is part of the US$13,7 million we have deployed, and this plant was for US$2.5 million,” he said during an analyst briefing for the group’s interim financials to June 30, 2023.
Old Mutual Zimbabwe has previously committed to continuing to invest in more solar energy projects in order to bridge the gaps in the country’s energy supply.
In 2021, the group and its partner SolGas commissioned the US$7,3 million SolGas Energy 5 megawatt (MW) solar plant at Cross Mabale in Hwange district.
However, Mr Matsekete said that in addition to investments in the Zimcampas student accommodation project in Bulawayo, there were also the ongoing Centragrid and Great Zimbabwe hydropower projects.
He said the group’s increased exposure to alternative investments such as energy and real estate would also see less exposure to traditional assets.
“This will ensure that we are able to access cash flows that are generated from those investments in the alternative investment portfolio, and cash flow in this environment becomes one key source of the ways that we can protect value,” he said.
He noted that the group also invested in assets able to close some gaps seen in the group’s proposition, such as pension funds or insurance funds.
“For instance, you will start to see us explore some of the initiatives that are in the early stages around how much exposure we can take within real estate, for example, in the retail space,” he said.
Mr Matsekete said the economy still presented significant opportunities that carry potential for growth in the long term.
This comes as the economy has witnessed sustained stability, with economic recovery largely led by the rebound in agriculture, tourism, and mineral commodity prices.
“We have seen that potential showing in investments that we have seen in new places that we have invested.
“Therefore, if we take a long-term view of the economy, we see there are still significant potential opportunities to be extracted that will benefit the economy and the communities,” he said.
Mr Matsekete said the group has established partnerships to support the mobilization of resources for lending and investment in client ventures and key sectors of the economy.
During the period under review, the group’s banking subsidiary CABS foreign currency loans accounted for over 90 percent of the total loan book.
The Old Mutual boss said agriculture and energy sector lending contributions increased to 46 percent compared to 39 percent in financial year 22 and 20 percent, respectively.
The non-performing loan ratio of 0,.2 percent was well within regulatory and internal limits. The bank’s foreign currency deposits closed at 92 percent of total deposits, up from 59 percent.
Total deposits increased by 77 percent, driven by an increase in US dollar deposits. The shift of balance sheet weight to US dollars, Mr Matsekete noted, also reflected in reduced interest margins to 16,9 percent, from 22,8 percent in the prior year.
Mr Matsekete said the bank strengthened partnerships with foreign lenders, mobilizing and deploying US$110.9 million of credit lines to customers in key sectors, up from US$108 million in December 2022.
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