Old Mutual has announced plans to split it operation into four separate businesses – Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank and OM Asset Management. Combined the four divisions currently have pre-tax operating profits of GBP1.8 billion.
Old Mutual expects the managed separation to be completed by the end of 2018 and coupled with a new capital management policy, Old Mutual expects to be able to reduce Group holding company debt materially and embark on a phased reduction of central costs.
Bruce Hemphil (pictured)l, Group Chief Executive, says: “The strategy we have announced today sets out a bold new course to unlock value currently trapped within the Group structure.
‘”We have four strong businesses that can reach their full potential by freeing them from the costs and constraints of the Group. As you can see from our results, 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. We are announcing today a strategy that will allow us to release the potential within the Group for the benefit of all its stakeholders for many years to come.
“There is likely to be a range of external influences on future Group reported earnings including slower economic growth, exchange rates and equity market volatility and how we execute the managed separation. We nevertheless believe that our four strong businesses are well placed to continue to perform strongly in their domestic markets.”
Patrick O'Sullivan, Chairman, adds: “Old Mutual is an iconic South African institution with a heritage of which it remains justifiably proud. From its roots as the premier financial services group in South Africa, it has evolved through the listing in London to reach a point today where we have four strong businesses.
“After much careful thought, we have taken the important decision that the best interests of shareholders will be served by enabling these businesses to chart independent courses over the medium term. We owe a considerable debt to the loyal staff whose efforts have shaped the evolution of the Group. I am sure that they, customers and shareholders alike will recognise the logic behind our decision and can look forward to the opportunity to create long term-shareholder value in the next phase of the evolution of Old Mutual.”