The parent company stated it intends to pursue one or more transactions, which will ultimately deliver two separate business entities.
“One will consist principally of the group’s wealth operations and the primary means of achieving this outcome is likely to be through a demerger,” read the update.
“The other will consist principally of the emerging markets operations through the creation of a new South African holding company,” it continued, adding: “There are various means to achieve this outcome and we will update the market on the precise steps we intend to follow in due course.”
Old Mutual also stated the managed separation would be materially complete by the end of 2018, with the group aiming to strike a balance between value, cost, time and risk.
While the senior management team has been given “specialist capacity to drive the planning and execution of the managed separation”, the group’s London head office has had a “significant redesign” to ensure its “orderly and phased winding down”.
After consulting with head office staff, the provider reduced full time equivalent headcount by 15 per cent, with further phased reductions planned.
The demerger process began in March, with the four parts of its business – Old Mutual Emerging Markets, Nedbank, Old Mutual Wealth and US-based UM Asset Management – to be separated following a strategic review.
Nedbank and Old Mutual Asset Management are already publicly listed, with Old Mutual Wealth and Old Mutual Emerging Markets now set to follow suit.
Old Mutual Wealth’s chief executive Paul Feeney said today’s (28 June) announcement was a clear endorsement of the firm’s vertically integrated strategy.
“What the landscape will look like when the UK extracts itself from the EU is far from clear,” he said. “Our focus is on our customers, on managing their assets and helping them navigate through these uncharted waters.”
Meanwhile, Old Mutual chief executive Bruce Hemphill said the increased market volatility following the referendum does not affect the group’s plans, although it may impact the performance of underlying businesses.
Mr Hemphill said: “The expected headwinds of weaker and more volatile foreign exchange and equity markets to which we made reference at our preliminary results have materialised.
“We are working intensively with the businesses to prepare them for separation. We remain confident that the managed separation process will lead to the creation of shareholder value, and strong businesses for our customers, staff and other stakeholders.”
Old Mutual intends to continue the phased reduction of its 65.8 per cent holding in Old Mutual Asset Management in an “orderly manner”, while supporting the development of its strategy, the statement added.
It also noted the possibility of receiving approaches for some or all of the separating businesses. “We will evaluate these carefully and rigorously, balancing the criteria of value, cost, time and risk relative to our broad stakeholder interests.”
Harry Katz, former financial adviser and now consultant at HA7 Consulting, commented: “Listing at the moment is unwise, for fairly obvious reasons.
“Although foreign firms could take advantage and acquire parts of the business, I can’t think of any potential suitors, as the likes of Axa are desperate to get out of the UK.”
Old Mutual Wealth comprises financial advice delivered by the Intrinsic network in the UK and AAM Advisory in Singapore; platform-based wealth management products and services delivered by Old Mutual Wealth in the UK and Italy and Old Mutual International globally; asset management via Old Mutual Global Investors; and discretionary investment management by Quilter Cheviot.
peter.walker@ft.com
