By Fifi Peters, CNBC Africa anchor and reporter

Update with comment from the Public Investment Corporation (PIC). Old Mutual’s largest shareholder.

As financial services group Old Mutual prepares for another face-off with its former CEO Peter Moyo in court today, its second largest shareholder, Allan Gray, says it has asked the insurer to make contingency plans.

The Cape Town based investment manager, said it had met with Old Mutual’s board in light of the ongoing litigation between the company and Moyo.

Moyo is seeking reinstatement at the insurer after being fired in June and wants Old Mutual’s non-executive directors to be declared delinquent, whereas Old Mutual wants its dismissal of him to be declared valid.

“The board must make contingency plans,” said Allan Gray Portfolio Manager, Jacques Plaut

“It must have a plan for various different future scenarios,” added Plaut, without divulging specific details.

Allan Gray, one of SA’s largest asset managers, owns 9.8% of Old Mutual.

The shares, managed on behalf of its clients that range from high-net worth individuals to working class South Africans, are mainly held in Allan Gray’s Equity, Balanced and Tax Free Savings Funds.

Old Mutual’s largest shareholder, the Public Investment Corporation refused to be drawn in on the matter.

In an emailed statement from its head of Corporate Affairs, Deon Botha it said: “The Public Investment Corporation (PIC) is not party to the legal proceedings your enquiry refers to. The PIC is a responsible asset manager. It is inappropriate to expect of the PIC to make public statements about a matter pending before court, and ultimately, one that arises from a dispute between a board of an investee company and its CEO.”

The PIC holds a 10.8% stake in the financial services group, according Old Mutual’s 2018 annual report.

The dispute has coincided with an 18% decline in Old Mutual’s share price on the JSE since May 24 when Moyo was first suspended by the board for a breakdown in trust and confidence.

But Allan Gray said it was not clear that significant value had been destroyed by the boardroom tussle.

“We aren’t sure whether much value has in fact been destroyed. The share price has fallen a lot, but the market may be overreacting,” said Plaut

Other factors that could have weighed on the share price includes soured sentiment towards SA stocks amid slow economic growth and downgrade fears, heighted global uncertainty from the US-China trade war as well as the ongoing litigation between the company’s board and its former CEO.

Old Mutual lost the first round in court against its axed CEO, Moyo on July 30, when the South Gauteng Court in Johannesburg found SA’s largest insurer unlawfully fired its former boss and ordered for his immediate reinstatement.

The company, however, barred the former CEO from resuming his duties the next day (July 31) on its belief that the decision to appeal Judge Brian Mashile’s ruling, nullified the order which also interdicted Old Mutual from finding a permanent new CEO.

The same court and judge that heard the original case will also hear today’s arguments.

Old Mutual’s board has said the loss of trust and confidence in the former CEO that ultimately resulted in his firing was due to his mishandling of a conflict of interest in his private company NMT Capital, in which Old Mutual owns a 20% stake.

Moyo says the conflict of interest is a “manufactured smokescreen”.

He claims he is being victimised for blowing the whistle on the board chair, Trevor Manuel’s alleged triple conflict of interest in overseeing the managed separation of the SA business from its UK operations as a director of Old Mutual Ltd, Old Mutual PLC and Rothschild, one of the advisers during the separation.

Manuel also sits on Allan Gray Orbis Foundation Endowment board. Allan Gray said this did not present a conflict of interest on its part.

“This endowment was formed by a donation from Mr Allan Gray. The Endowment supports various education and job creation initiatives in South Africa. The Endowment is totally separate from the Allan Gray Limited operating entity so Allan Gray Ltd is not conflicted,” said Plaut.