Anglo-South African financial group Old Mutual is set to
finish breaking up its business into four distinct units next
year and float two of those units, the company said in its
interim first-half trading results issued Friday.
The company had previously announced the plans to address
concerns that the organization had become increasingly
difficult to run in a rapidly changing global regulatory
environment. In total, four entities are being separated out:
Old Mutual Asset Management, Old Mutual Emerging Markets, Old
Mutual Wealth, and Nedbank.
Old Mutual said it has agreed terms to sell 45 percent of
U.S.-based Old Mutual Asset Management in the first half of the
year to an undisclosed buyer for proceeds of $785 million,
which will cut the groups stake to just 5.5 percent.
Chinese conglomerate HNA Group acquired a 25 percent stake in
the business in March, according to a Financial Times report.
The sale of its shares in the U.S. investment business bagged
the company a £108 million ($140 million) profit in the
first half of 2017, as well as annualized cost savings of
Old Mutual is planning to list Old Mutual Wealth, the
division that houses the U.K. asset management unit, at
the earliest opportunity in 2018, after Old Mutual issues
its full-year 2017 results, group chief executive Bruce
Hemphill said in a statement accompanying the results for the first
half of 2017. It also plans to list a new holding company that
will include its emerging markets business and its stake in
Nedbank. Hemphill added that the business is making
excellent progress in delivering the managed
separation of the four Old Mutual businesses.
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The U.K. business increased profits by 29 percent year on
year, from £104 million in the first half of 2016 to
£134 million over the same period this year. This was
attributed to a strong investment performance, which generated
performance fees of £17 million.
Despite continued questions over the strength and
resilience of the U.K. economy, including rising inflationary
pressures, we saw continued growth in net client cash flows
which were up 53 percent to £4.9 billion, said Paul
Feeney, chief executive officer of Old Mutual Wealth, in the
Old Mutual is one of a handful of international investment
groups transforming its composition as a result of regulatory
and competitive headwinds. Yesterday, British insurer
Prudential announced the merger of its U.K. insurance
and asset management divisions, while insurance giant Standard
Life will complete its merger with Aberdeen Asset Management
next week, according to a regulatory filing today.
Eamonn Flanagan, an analyst at U.K. investment group Shore
Capital, said todays announcement showed that the
business was on track, noting that at a strategic level,
the managed separation is progressing well.