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London - Anglo-South African insurer Old Mutual [JSE:OML] is setting aside R5bn to fund expansion in fast-growing sub-Saharan Africa.
Old Mutual, which last year bought the life insurance unit of Nigeria's Oceanic Bank, plans to buy minority and majority stakes in businesses in east and West Africa over the next three to five years, it said on Friday.
The company, which on Thursday reported higher-than-expected profit, said it wanted to cash in on growing demand for insurance across the region as rapid economic growth, fuelled in part by the natural resources boom, increases consumer spending.
"We believe that the prospects for growth in Africa are underpinned by sustainable, structural factors," Old Mutual said, adding that the continent's economic output is forecast to have quadrupled to $2 trillion between 2000 and 2012.
Old Mutual, which owns insurance, banking and fund management businesses across four continents, said adjusted operating profit for 2012 rose 18% to £1.6bn, narrowly beating the £1.57bn expected by analysts in a company poll.
The improvement was driven by a strong performance from Nedbank Group [JSE:NED], Old Mutual's majority-owned banking business, where profit rose by nearly a quarter to £828m, and good growth at its emerging markets businesses.
Old Mutual's asset management unit in the United States took in £900m of client money during the year compared with an outflow of £3bn in 2011, its first positive annual inflow since 2007.
The company, which last year deferred plans to float the US asset management business, said the unit was not yet ready to go public.
"It hasn't got to the state where it would be value-enhancing to do an IPO," CEO Julian Roberts told reporters on a conference call.
Old Mutual's London-listed shares have almost doubled over the last three years, beating a 22% gain for the FTSE 100 share index, as it sold businesses to repay debt and dispel investor worries that the group lacked focus and would be worth more broken up.
The disposals partly reversed an international acquisition spree Old Mutual began in 1999 to reduce its dependence on its historic home of South Africa.
The stock closed at 202.5 pence on Thursday in London, valuing Old Mutual at about £10bn. The company is paying a total dividend of 7 pence per share, an increase of 23%, and ahead of the 6.5 pence expected by analysts.
Old Mutual's share price rose 2.94% to R28.05 on the JSE on Friday morning.
