Old Mutual Group may sell one or more of its businesses, which includes Old Mutual Asset Management (Omam), as the firm struggles to achieve “managed separation” in a timely and cost-effective manner.
In March this year, the South Africa-based group announced it was splitting its four constituent businesses – Omam, Old Mutual Emerging Markets, Old Mutual Wealth and Nedbank – into independent, listed entities. As a result, Old Mutual will cease to exist and its London head office will be closed at a cost of £65 million (€72 million).
However, in a statement yesterday, the group said “plans are subject to change” and indicated it was prepared to put businesses up for sale.
“Old Mutual may receive approaches for some or all of its businesses. There can be no certainty as to the nature of the final outcome, as a result of factors such as stakeholder consent, regulatory conditions and/or the readiness of the underlying businesses,” the statement said.
If the separation goes ahead as originally planned, the company projects that uncoupling and listing Old Mutual Wealth and Old Mutual Emerging Markets on the London and Johannesburg stock exchanges will have “recurring, incremental” costs of between £5 million and £10 million per annum. Also, launching Old Mutual Wealth as a standalone entity before the end of this year will cost at least £10 million.
Old Mutual also indicated that construction of its wealth platform, Heritage, had been paused in order to “simplify and de-risk” the project, as estimated costs for its completion increased by £225 million to £450 million.
The group intends to reduce its debt through asset disposals, such as the reduction of its 66% holding in Omam.
If the group or its businesses are not sold, the separation process is expected to be complete by the end of 2018.
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