JOHANNESBURG - Financial services group Old Mutual Plc yesterday gave further details on its much-touted managed separation and said it would reduce its exposure in Nedbank to 19.9 percent from 54 percent on the completion of its four-way breakup by the end of the year.
The group said Nedbank, one of South Africa's largest banks, would distribute Old Mutual's shares among shareholders in a new South African holding company that would also houses its emerging market activities. It said the holding company – Old Mutual Limited (OML) would have its primary listing on the JSE and a secondary listing on the London Stock Exchange. The group said OML would be listed on both exchanges at the earliest opportunity in 2018 following the publication of Old Mutual plc’s 2017 full-year results announcement.
Nedbank said OML would not sell its shareholding in the bank. “OML announces today (Wednesday) that it has agreed with Nedbank that, subsequent to the unbundling of the majority of its shareholding, the remaining minority holding will be 19.9 percent, providing a foundation for the continued strategic relationship between the two businesses,” the company said. Old Mutual made a complex review of its businesses in 2015. Under the strategy, the group said it would separate them into separate entities as keeping them in one had proved costly. It said it would separate the groups four assets four — Old Mutual Emerging Markets, Old Mutual Wealth (OWW), Old Mutual Asset Management (OMEM) and Nedbank. The breakup of Old Mutual is being overseen by Rob Leith, a former investment banker who had worked with Standard Bank and Russia's Sberbank, and who joined Old Mutual as director of managed separation in early 2016.
On Monday, Old Mutual Group Holdings (OMGH), the South African intermediate holding company for OMEM and Nedbank, announced the appointment of seven additional non-executive directors. The group yesterday said: “It is planned that this will become the new board of directors for OML.” OMGH was established as a warehouse for the group’s Nedbank shares penned for distribution to Old Mutual plc’s shareholders once the managed separation is complete. OMGH is chaired by former Finance Minister Trevor Manuel.
Last month, Old Mutual said that it might dispose of its subsidiaries in China, Colombia, Mexico and Uruguay as part of its managed separation process. The group has already sold its Indian joint venture stake to Kotak Mahindra Bank for $205 million. As part of its strategy, it has cut stakes in US subsidiary OMEM, and UK subsidiary, Old Mutual Wealth. Additionally, in September 2017, the company announced plans to split its multi-asset arm and its single strategy Old Mutual Global Investors (OMGI) business into two separate entities. In the six months to end June, Old Mutual reported a 37 percent increase in pre-tax adjusted operating profit (AOP) to £969million up from £708m a year ago; helped by pound weakness and a strong performance by OMW, whilst Nedbank reported 10 percent growth in AOP to R9bn in its managed operations.