Old Mutual sheds $84m debt burden

CLOUDINE MATOLA

Publicly traded financial services group, Old Mutual Zimbabwe Limited (OMZL), has emerged from a long-running debt overhang with a stronger balance sheet and greater financial flexibility to invest in new projects and pursue expansion, Business Times can report.

The company settled its US$84.3m legacy debt through the issuance of OMZL C Preference Shares, removing a significant constraint on cash flow and capital allocation.

Old Mutual Zimbabwe had been carrying the legacy obligation for years, limiting its ability to deploy free cash flow towards growth.

Speaking at the group’s 2026 half-year results presentation, chief executive officer Samuel Matsekete said the settlement had effectively removed the “albatross” that had weighed on the group’s balance sheet and investment capacity.

“The significance and importance of that is our balance sheet becomes more resilient, and the albatross of the debt, in terms of how much free cash flow do you have, how much can you invest in new projects or expansion, is now off the neck,” Matsekete said.

“Which means we are unleashed to grow and go into the additional things we have planned.”

The debt settlement comes as the group seeks to accelerate growth by targeting underserved segments of the market, while broadening its product offering and customer base.

Matsekete said the strategy would focus on increasing penetration in segments where the group had previously had a limited presence, with growth expected to come from higher customer numbers, greater product uptake and increased transaction volumes.

“We are expanding our reach into those segments who have previously been underserved,” he said.

The strategy extends beyond lower-income consumers, with the group identifying high-net-worth individuals as another segment where there is scope for deeper penetration.

“We also believe the high-net-worth segment in this market has been underserved, so we have developed propositions that would appeal more strongly to high-net-worth individuals in banking and in the investment world,” Matsekete said.

The group is also seeking to diversify its revenue base and recalibrate its pricing as market conditions evolve, with a particular focus on protecting yields and margins.

“We seek to continue diversifying revenue lines and part of that is to respond to how we see the market evolve from pricing products, but also to ensure that we can build in more resilience,” he said.

Matsekete said margin compression remained a challenge across the group’s businesses, particularly in banking, where customers were increasingly using multiple financial institutions and funding costs remained elevated.

“To strengthen our value propositions, we are trying to attend to yields and margins. Margin compression, you will actually see it variously,” he said.

In banking, he said, increased competition and multi-banking by customers were putting pressure on margins, while the cost of finance, particularly for institutions reliant on credit lines, was not adjusting as quickly.

Fee margins were also under pressure from regulation and the need to remain competitive, requiring the group to compensate through higher volumes while refining its product propositions.

“We need to be attending to the volumes, which we are doing under Block 1, but we are also needing to adapt our propositions so we can give more value for money in those propositions,” Matsekete said.

The strategy comes against the backdrop of a sharp improvement in the group’s financial performance.

Profit for the half year more than quadrupled to US$47.9m, from US$9.8m in the comparative period.

Net fee and commission income rose 51% to US$38.3m from US$25.4m, while net interest income increased 30% to US$22.5m from US$17.3m.

Total assets grew 17% to US$2.1bn from US$1.8bn, supported by increased lending activity, deposit growth, investment cash flows and positive investment returns.

With the legacy debt now settled, OMZL is positioning the stronger balance sheet as a platform for the next phase of growth, with management betting on broader market penetration, new propositions and greater revenue diversification to sustain returns.