Johannesburg - Old Mutual yesterday announced it was forging ahead with its strategy of creating four separate standalone businesses with Old Mutual Wealth (OMW) and Old Mutual Emerging Markets (OMEM) finally ready to stand on their own.
Chief executive Bruce Hemphill said Old Mutual was now in the process of getting the unlisted entities of OMW and OMEM ready for independence.
“The managed separation process is acting as a catalyst for delivering long-term sustainable earnings and growth and positioning the underlying businesses to be great on a standalone basis,” he said.
OMW recorded net client cash flow of £0.9 billion (R15.8bn) for the third quarter to end September, nearly 61percent down from £2.3bn in the previous corresponding period.
Year-to-date net client cash flows stood at £ 4.1bn as compared with £4.6bn a year earlier, hurt by market weakness and continued uncertainty following Britain’s vote to leave the EU.
Ian Cruickshanks, chief economist at SA Institute of Race Relations, said: “The good thing about this separation is that each business will concentrate on its strength and not be widely spread out as before. It will also give people an opportunity to maximise their potential in a better structure.”
The four groups will be: OMW based in the UK; OMEM based in South Africa; Old Mutual Asset Management (OMAM) based in the US; and Nedbank. These will operate as independent businesses, which could unlock significant value for shareholders and free capital.
The group said OMW managed separation costs and business standalone costs in the second half of the year were expected to be £10 million.
In a process to create strong entities that are able to run separately, Old Mutual also announced that it would reduce its holding on the OMAM.
“We intend to continue with the phased reduction of our 66 percent holding in OMAM in an orderly manner while supporting the development of its strategy. Through asset disposals and the use of Old Mutual surplus cash, we intend to materially reduce Old Mutual’s holding company debt,” the company said.
BUSINESS REPORT