The four units will be: South African bank Nedbank; UK wealth manager Old Mutual Wealth; OM Asset Management, a US asset manager; and Old Mutual Emerging Markets, its life assurance, investment and lending operation which spans Asia, Africa, and Latin America.
“We have four strong businesses that can reach their full potential by freeing them from the costs and constraints of the group,” said chief executive Bruce Hemphill.
“These businesses are performing strongly, have excellent competitive positions in sizeable markets and the underlying growth potential to flourish independently.
“Our new strategy will allow each business to have simpler access to capital markets to fund its growth more easily and be valued more appropriately, with more straight forward regulatory arrangements,” Hemphill added.
Break-up plans
The break up of the FTSE-100 group is expected to be completed by the end of 2018. Old Mutual said it also expects to cut its 54% stake in the Nedbank Group to “an appropriate strategic minority position” but has not yet decided how to achieve this.
“Old Mutual currently envisages reducing its shareholding in Nedbank Group primarily by way of a distribution of Nedbank Group shares to the shareholders of Old Mutual in an orderly manner and at an appropriate time,” it said.
No detailed plans were given for the other three units, however there has been speculation in the UK press that buyout firms Cinvin and Warburg Pincus have tabled bids worth several billion pounds for Old Mutual Wealth (OMW). It is also thought possible the company may seek to list OMW in the UK.
Profits rise
The break-up announcement came alongside the company’s annual results for 2015 which showed a 4% rise in pre-tax profits to £1.7bn ($2.4bn, €2.2bn). The company said the profit would have been 11% higher if not for the impact of currency movements.
The group ended 2015 with £304bn in assets under management, a rise of 6% on the previous year.
Old Mutual shares were trading down 3% at 179.50p near the end of the London morning session.
OMW growth
Old Mutual Wealth said its profit had increased by 35% to £307m in 2015 with net client cash flow up a hefty 86% to £6.9bn. Funds under management rose by 27% to £104.4 bn, up from £82.5 bn in 2014
“Old Mutual Wealth delivered a strong performance in 2015 outperforming the targets set in 2012 for profit, return on equity and operating margin,” the company said in a statement.
“The focus over 2016 is to further embed the strategy, driving collaboration between the individual businesses whilst delivering customer value.”
Old Mutual International was also reported to have done well.
Steven Levin, global head of distribution for OMW said: “Our International business is going from strength to strength as we focus on our core growth markets.
“The investment we have made in developing our Wealth Interactive technology and strengthening the support we provide advisers and customers has provided a solid foundations on which to grow.”
