Quilter focuses on UK market following a strategic review
DURBAN - QUILTER plc has set its sights on the UK market as its core business going forward following a strategic review of its operations and selling Quilter International business for about £483 million (R9.78 billion) was a clear demonstration of the path the wealth manager is embarking upon.
The sale of the former Old Mutual International business to Utmost last week comes after the Isle of Man business was put under a strategic review by the group in December last year in a move that shocked the industry and investors.
Quilter expects net cash proceeds of about £450m from the sale after allowing for transaction costs.
The transaction is expected to close at the end of the year and is conditional on Quilter shareholder approval, customary regulatory approvals in the Isle of Man, Ireland, Hong Kong, Singapore and the Dubai International Financial Centre and anti-trust approval from the European Commission.
Quilter’s share price rallied to a six-month high on the JSE following the proposed sale to R34.32 a share. Later in the day on Thursday the shares closed 5.09 percent higher at R34.08.
Quilter chief executive Paul Feeney said they were delighted to announce the proposed sale which represents an attractive valuation for their shareholders.
“It allows us to focus on accelerating our growth and efficiency plans as well as further simplifying and focusing our business around its core UK high net worth and affluent customer proposition.
“It also gives us the ability to deliver a further meaningful capital distribution to shareholders. With the recent completion of our platform transformation programme, we are set up for strong growth,” Feeney said.
Quilter intends to use a portion of the net cash proceeds to fund selected growth initiatives and accelerate the next phase of optimisation, reduce costs as well as returning some to shareholders.
The group said it would continue to engage with its shareholders on the range of strategic growth opportunities available to it.
Nesan Nair, a senior portfolio manager at Sasfin Securities, said it looked like they really wanted to keep their focus on the UK market where they see better opportunities of growth and returns.
“The fact that they intend to distribute a large portion of the proceeds to Quilter shareholders is good news for shareholders,” Nair said.
Looking ahead, Quilter has set a target of annualised net client cash flow growth of at least 6 percent of opening assets under management and administration at the beginning of 2022 – an increase from the group’s previous 5 percent a year target.
Quilter also expects to deliver a standalone operating margin of at least 25 percent in 2023 and at least 30 percent by 2025.