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Old Mutual Lays Out Timetable for Four-way Split

The financial conglomerate is to float two of its businesses “at the earliest opportunity” next year as it completes the break-up of its four business units.

  • Joe McGrath

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 group’s 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 £31 million.

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 earnings report.

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 today’s announcement showed that the business was on track, noting that “at a strategic level, the managed separation is progressing well.”