Old Mutual chief talks on alternative investments

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From November 3 to 5 this year, Old Mutual Malawi plc through its subsidiary Old Mutual Investment Group and in partnership with GuarantCo hosted a capacity building training workshop to enhance market capacity and increase knowledge on project finance structures to support affordable housing and capital market transactions. In this exclusive interview with Nation Publications Limited journalists AUBREY MCHULU and GRACE PHIRI, Old Mutual Malawi group chief executive officer Edith Jiya shares some insights. Excerpts:

Jiya: Our alternative investments team focuses on infrastructure projects

First, congratulations on the project. Why is Old Mutual hosting this workshop and what is it that you want to achieve? What is the significance of this event?

Thank you very much. As a matter of context, as Old Mutual, being a committed corporate citizen, we embraced an alternative investment capability. We believe we have the duty to contribute to the development of our capital markets. For so long, we have relied on traditional assets, but through alternative investments we scout for opportunities and identify those opportunities for the benefit of our clients. That is the reason alternative investments are there.

Having identified some key projects, one of which is the student accommodation project in public universities, we are working with GuarantCo and we thought it a good opportunity to also develop the market in as far as understanding such initiatives for the benefit of the client out there is concerned. Euromoney is providing support in this capacity building workshop. Essentially, the workshops will help to build the capacity for asset managers, pension fund managers and other people managing funds on behalf of investors. They are the people that make decisions of where to invest. This workshop aims to capacitate them in making such decisions. It will enable them to identify other areas of investment to maximise investors’ returns. Our alternative investments team focuses on infrastructure projects, private equity and agricultural investments. All the investments under alternative investments are guided by a responsible investment approach to ensure that our investments not only deliver strong returns to our clients, but that we also deliver positive impact to our communities and the environment.

How did you identify the projects and what was the criteria used to identify the beneficiaries?

Having identified some key projects under alternative investments, one of which is the infrastructure project on the student accommodation project, we are working with a number of partners to develop that opportunity. In this particular case, we have been working with GuarantCo to provide bondholders with a partial credit guarantee for the construction of student accommodation across three university campuses in Lilongwe and Blantyre. When we saw the request for expression of interest a few years ago on the provision of student accommodation in public universities as a Public Partnership Partnerhip [PPP] project, we were compelled to participate. In this regard, Old Mutual signed an agreement with the Public Private Partnership Commission [PPPC] to provide accommodation at the KuHes [Kamuzu University of Health Sciences] and Luanar [Lilongwe University of Agriculture and Natural Resources] campuses where over 4 700 beds will be provided for undergraduate and postgraduate students. Through this project, we will be able to provide comfortable and safe living spaces for the students in these universities to allow them to better focus on their studies. The project is also creating jobs in the local communities both during the construction and operation phases.

We have, so far, constructed 154 beds at KuHes Lilongwe campus.  The construction is completed and we expect the students to start occupying the rooms in early 2022. Luanar will have about 3 000 beds.

How do you intend to finance the project for the second phase?

We are going to finance it through debt and equity. Our intention is to bring in other investors to invest. For the debt financing, we expect to raise a maximum of K40 billion through issuance of a bond. We plan for it [the bond] to be listed on the Malawi Stock Exchange where the proceeds will go towards construction of the remaining hostels. This is a big undertaking and we cannot do it alone.

As an asset manager, what is your assessment of the Malawi property market?

When we look at infrastructure, as Malawi, I look at it as a market with plenty of opportunities because we are yet to develop. We have a lot to do, even in our towns, in terms of infrastructure. The market may not be perfect at the moment, but we still believe in the long-term prospects of the general business. There are a number of challenges, including the impact of the Covid-19 pandemic.

Finally, how is business at Old Mutual amid the impact of the Covid-19 pandemic?

I can say that despite Covid-19, we have been quite resilient. We devised ways of working with our customers despite the restrictions that we were in. We have devised new ways of doing business. So far, we have a decent performance.