Old Mutual’s plan to split gathers pace
The group said on Tuesday that it would sell 13 million ordinary shares in its Old Mutual Asset Management (Omam) arm through a public offering.
The sale is a continuation of the process that was announced by Hemphill, which entailed splitting the group into four entities.
The shares are offered by Old Mutual, through its wholly-owned subsidiary, OM Group UK. The underwriters also have a 30-day option to purchase up to an additional 1.95 million ordinary shares at the public offering price, less the underwriting discount.
In addition to this deal, Omam entered into a repurchase agreement with Old Mutual and OM Group UK in which Omam agreed to repurchase 6million ordinary shares from OM Group in a private transaction at the price per ordinary share sold to the public by OM Group UK.
Merrill Lynch, Morgan Stanley, Citigroup, Credit Suisse Securities and Evercore are acting as joint book-running managers for the offering.
When the split is complete, the group will be separated into Old Mutual Wealth (UK); Old Mutual Emerging Markets (South Africa); Old Mutual Asset Management (US) and Nedbank. The split was set in motion when Old Mutual announced in August the sale of Old Mutual Wealth Italy by entering into a short period of negotiations with Cinven, the owner of Ergo Italia.
Brad Preston, chief investment officer at Mergence Investment Managers, said in explaining the Old Mutual Wealth Italy sale, the past activities were part of the overall break up of the business.
“Old Mutual needs to reduce gearing to complete the group break up, so a sale of the Italian business and then the US Asset management business are probably the first steps in the process before they can list or sell the OM Wealth business in the UK, and then list the SA business, and finally unbundle Nedbank to SA shareholders,” said Preston.
Nico Smuts, an analyst at 36ONE Asset Management, said Old Mutual was simplifying its structure. “The group intends to sell Old Mutual Wealth Italy because it is a non-core business and would not fit neatly in any of the four segments the group will be split into,” he said.