Product details

Old Mutual was established in 1845 in the Cape of Good Hope as an unincorporated association with the object of providing life assurance for its members. By 1999, Old Mutual provided a broad range of financial services to its policyholder and other clients. As at 31 December 1998 the group's total assets were 32 billion pounds (R311 billion). The morning of 12 June 1999, the day of Old Mutual's listing on the London and Johannesburg Stock Exchanges, Johannes van der Horst, Executive General Manager, responsible for demutualisation and listing was concerned as to how the listing would be received. For the listing on the JSE in November 1998, Sanlam, the second largest financial service provider in South Africa, had priced their shares well within the indicative price range that they had quoted, but considerably lower than most financial experts had predicted, hoping for a favourable after-market. However, their shares dropped substantially before recovering in mid-1999. Although the global economic situation had improved since then, and the listing was meticulously prepared, Old Mutual management were perturbed. South African companies had recently emerged after decades of isolation and were relatively unfamiliar with the complexities of the international markets. Van der Horst was concerned that the vagaries of the global markets could turn against them. The case discusses international trends in the financial services industry and Old Mutual's reasons for demutualisation and listing.