The JSE welcomes MMI Holdings to the fold
In March 2010 two of South Africa’s top financial services brands announced their intention to merge. On 1 December 2010, after eight months of intensive behind-the-scenes negotiation, Metropolitan and Momentum tied the knot to emerge as MMI Holdings Limited (JSE: MMI). The combined entity boasts an embedded value of around R30 billion and R400 billion assets under management, ranking it among the top local listed insurance companies.
FAnews Online attended the listing ceremony which took place on the 9th floor of the JSE Building in Sandton yesterday. We jostled with the throngs of media representatives, executives and other interested parties as MMI group chief executive, Nicolaas Kruger, trumpeted the group’s arrival on the local exchange with a “blast” on the JSE kudu horn. “This is a significant day in our history and I feel very proud that we have come this far,” he said. “The merger process was comprehensive, and sometimes difficult, but the fact we are listing today is confirmation of the compelling business case the merger presents.” At the time of writing shares in MMI Holding were changes hands at 1600c/share, giving the new listing a market capitalisation of R8.987 billion!
And now the hard work begins
One of the challenges Kruger was alluding to is the Competition Commission ruling regards retrenchments post-merger. The Commission requested a two-year moratorium on job cuts, except at the senior management level. Although the executive has taken this decision on appeal, they seem confident natural attrition will contribute to the group achieving optimal staffing levels.
How does the deal impact on the clients and intermediaries who do business with the Metropolitan and Momentum brands? If the feedback provided by Kruger is anything to go by the “business as usual” adage applies. MMI will hit the ground running, with both its retail business units, Momentum Retail and Metropolitan Retail intact. These divisions will be headed up by Johann Le Roux and Phillip Matlakala respectively and will stick to their proverbial “knitting” by focussing on their traditional products and markets. That means they’ll treasure the distribution channels they’ve developed over a number of years.
Metropolitan’s 2,500-strong agency force will continue servicing clients in the low and middle income groups, while Momentum’s quality broker distribution channel remains critical to its ongoing success in the mid to upper income space.
Spreading the focus
The merger has created opportunities to expand the company’s focus. In addition to the retail operations just mentioned, MMI will comprise of:
- An investments division (asset management, collective investments, multi-management, property and international investments), headed by Morris Mthombeni;
- An employee benefits division, headed by Etienne de Waal;
- A health division (to combine the well-established healthcare administration and funding businesses of Metropolitan and Momentum), under Blum Khan;
- And an international business division (primarily focused on Africa), under Mervyn Cookson.
The African emerging market growth story has undoubtedly caught MMI’s eye. “Our African footprint will offer us a wealth of exciting opportunities,” said Kruger. He pointed to Metropolitan’s retail presence in seven (and Momentum’s health and employee benefits presence in 11) African countries as the perfect foundation to build on. “This combination allows for a collaboration that will create a broader geographic presence, and provide a greater diversity of products in these and other African countries,” he said.
Keeping the core values
In a post-listing interview I chatted briefly with Wilhelm van Zyl, deputy CEO of MMI, and made a point of asking him what qualities or features the group would retain going forward. His answer should address any concerns financial intermediaries may have harboured as details of the deal emerged. Van Zyl said the new entity would retain its passion for serving clients (including retail clients and stakeholders in the distribution chain); build on the legacy of its strong retail brands (Metropolitan and Momentum); strive to be a dominant financial services company; and do all in its power to remain an employer of choice.
In conclusion, Kruger said: “We are approaching the end of an eventful year, not only because of the merger, but also for South Africa as a whole. We look forward to a New Year with brighter prospects for all our stakeholders, as we embark upon a new chapter in our history.”
Editor’s thoughts: My “business as usual” assertion earlier in today’s newsletter might be a trifle simplistic. From a financial intermediary perspective the changes stemming from this merger will be for the better. You’ll be dealing with a larger business with more focused businesses units and an expanded product line. And that’s how you spell “opportunity”. Have you noticed any changes in your dealings with the Metropolitan or Momentum brands since the merger was announced? Add your comments below, or send them to [email protected]
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