Old Mutual to Split Businesses, Reduce Nedbank Holding -- 2nd Update
11 Marzo 2016 - 9:09AM
Dow Jones News
By Ian Walker
LONDON--Old Mutual PLC has announced plans to separate its four
main businesses as it faces up to potential pressure on earnings
from slowing economic growth and volatile exchange rates, even as
it reported a 5% rise in 2015 net profit.
The four businesses are Old Mutual Emerging Markets, Old Mutual
Wealth, Nedbank and OM Asset Management. The banking and investment
company expects to complete the separation by the end of 2018.
It will also reduce its stake in Nedbank, a South African
lender, by distributing its shares to Old Mutual holders. It
doesn't plan selling any of its Nedbank stake to a strategic
investor.
Chief Executive Bruce Hemphill said the new strategy will allow
each business to have simpler access to capital markets to fund its
growth more easily and be valued more appropriately, with more
straight forward regulatory arrangements.
"There is likely to be a range of external influences on future
group reported earnings including slower economic growth, exchange
rates and equity market volatility and how we execute the managed
separation. We nevertheless believe that our four strong businesses
are well placed to continue to perform strongly in their domestic
markets," he said.
Shares in the banking and investment company rose earlier this
week on speculation of a breakup.
At the end of 2015, Nedbank, which is independently listed on
the Johannesburg Stock Exchange, was 54.1% owned by Old Mutual Life
Assurance Company Ltd. and associated South African companies in
the Old Mutual group.
Nedbank said Friday that "it is a well-capitalized South African
bank with a strong balance sheet and a clear strategy to deliver
ongoing returns to shareholders."
It said the separation of Old Mutual "will have no impact on the
strategy or day to day management or operations of Nedbank Group or
its staff or clients." Nedbank said it plans to maintain its
relationship with Old Mutual following the separation.
However, Nedbank said that the bank and Old Mutual mutually
agreed that the latter's majority shareholding in Nedbank is "not
necessary to achieve either party's strategic objectives."
Old Mutual envisages reducing its interest in Nedbank overtime
to a "strategic minority position," likely by way of a distribution
of Nedbank shares to the shareholders of Old Mutual "in an orderly
manner and at an appropriate time."
For the year ended Dec. 31, 2015 Old Mutual made a net profit of
GBP614 million ($876.49 million) compared with GBP582 million a
year earlier. Funds under management at Dec. 31 stood at GBP327.9
billion.
The board plans to declare an unchanged second interim dividend
of 6.25 pence a share, making a total payout for the year of 8.9
pence, up from 8.7 pence in 2014.
Old Mutual announced in November that it would conduct a review
after it appointed Mr. Hemphill as CEO.
At the time of his appointment Mr. Hemphill, who joined the
company from Standard Bank, said he planned to visit the individual
businesses within the group and report his observations in the
second quarter of 2016.
Share in Old Mutual jumped 11% in early trading in London
Monday, before giving up some gains to trade 8.5% higher by
midmorning.
Old Mutual, which was established in 1845, provides investment,
savings, insurance and banking services to more than 17 million
customers in Africa, the Americas, Asia and Europe. The company has
been listed on the London and Johannesburg Stock Exchanges, among
others, since 1999.
Its shares closed in London Thursday at 185.3 pence and are
currently down 15% over the past 12 months.
Write to Ian Walker at ian.walker@wsj.com and Alexandra Wexler
at alexandra.wexler@wsj.com
(END) Dow Jones Newswires
March 11, 2016 02:54 ET (07:54 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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