Old Mutual split looms

Share price soars by 7.3% in Europe

FINANCIAL services company Old Mutual is considering all options in a strategic review, with speculation of a break-up and takeover bids for its assets, which has sent its shares soaring.

Sky News reported at the weekend that the £9-billion (R196-billion) company was working on a plan to split itself up and that this could trigger a takeover battle for its operations which include banking, insurance and asset management.

Private equity firms Cinven and Warburg Pincus have tabled a multibillionpound joint cash offer for Old Mutual Wealth, the firm’s British asset management business, Sky News said, without citing sources.

At midday yesterday, Old Mutual shares were up 7.3% at 192.8 pence (R42.70), the biggest rise by a European blue-chip stock.

The insurance and asset management sectors have seen several deals in recent years. Old Mutual Wealth bought money manager Quilter Cheviot in 2014, and sold fixed income asset manager Rogge last month.

Old Mutual announced a strategic review in November, after former Standard Bank executive Bruce Hemphill took over as chief executive.

It said yesterday it had not made any decisions, but would give an update with its annual results on Friday.

“We can confirm that all options for the strategic review are being considered but no decision has yet been made‚” Old Mutual said.

Analysts and industry insiders said the firm may also consider listing Old Mutual Wealth, after it listed its US asset management business in 2014.

Sky News said the group was looking to divide itself into four standalone companies comprising its stake in Nedbank Group Ltd, its UK-focused wealth unit, its South Africa-based emerging markets operation, and its institutional asset management business.

Nedbank said yesterday it was “engaging collaboratively” with Old Mutual as part of the review, but advised shareholders to exercise caution when dealing in Nedbank shares.

Old Mutual has a 54.57% stake in Nedbank.

One Johannesburg-based analyst, who declined to be named, said Old Mutual’s South African operations held little appeal for US and European investors as it would expose them to swings in the value of the rand.

The firm beat third-quarter sales forecasts, boosted by record inflows into its wealth management unit.

It also reported strong sales across its Africa and emerging markets operations, with the latter up 22% in local currency terms.