Renee Bonorchis
OLD MUTUAL, Africa’s largest insurer, has agreed to buy British company Quilter Cheviot for as much as £585 million (R10 billion) to accelerate its growth in wealth management and expand its client base.
Quilter Cheviot, which traces its roots to 1771, had 38 000 clients and managed £16.2bn, Old Mutual, which has its headquarters in London, said on Friday. The acquisition will be funded by proceeds from the sales of Old Mutual’s European units and a minority stake in its US asset management arm.
“Quilter Cheviot fills a significant gap in our business, allowing us to serve better the affluent and high-net-worth segments,” said Julian Roberts, chief executive of Old Mutual.
The insurer said it planned to build a wealth business managing £92bn. The purchase price includes about £42m of deferred stock for Quilter Cheviot’s managers, depending on the business’s performance.
Quilter Cheviot has been owned by private equity investors since the end of 2011. Buyout firm Bridgepoint is exiting its investment through Old Mutual Wealth’s purchase.
Old Mutual Asset Management completed its initial public offering in New York on October 15, raising a total of $483m (R5bn).
Sales of insurance businesses in Germany, Austria and Poland will garner about e310m (R4.4bn) for Old Mutual as it simplifies its operations.
Its stock ended 3.18 percent higher at R31.15 in Johannesburg on Friday.
By March, Old Mutual “will be able to update the market on our capital strategy with a clear picture of our surplus cash”, Roberts said on Friday.
Quilter Cheviot has about 510 employees and no major changes are planned. The wealth unit’s base was now in place and there were “no plans to do anything else” for the unit except add specialist investment management teams when needed.
With the US initial public offering done, the purchase of 20 percent of Ecobank Transnational by Old Mutual’s banking unit, Nedbank Group, under way, the sale of non-core assets completed and expansion into fast-growing African countries achieved, Roberts has tackled some of the goals he first set out six years ago.
“As for what’s next, I have to absolutely deliver on the strategy we’ve got,” Roberts said.
“We made a very large investment in Ecobank with Nedbank and that needs to work and we’re still sub-scale in some of the African countries we’ve started in.
“But we’ve now got the building blocks we need,” he added. – Bloomberg