Old Mutual PLC announced Friday plans to separate its four business units: Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank Group and OM Asset Management, a spokeswoman said.
“We have four strong businesses that can reach their full potential by freeing them from the costs and constraints of the group,” said CEO Bruce Hemphill in a news release announcing the move.
Mr. Hemphill added that he believes the change “will allow each business to have simpler access to capital markets to fund its growth more easily and be valued more appropriately, with more straightforward regulatory arrangements.”
The business units are expected to be fully separated by the end of 2018.
The firm said it would spin off its 54% controlling stake in Nedbank to shareholders, but was short on details about plans for the other units.
Mr. Hemphill said the company would consider an initial public offering for some assets, without elaborating.
The 171-year-old insurer's businesses have different funding needs and lack synergies, according to Mr. Hemphill, who started a strategic review in November as he sought to reduce costs and increase value after tighter regulations crimped returns.
“Old Mutual Wealth continues to be the fastest growing business unit and proved once again why it is the jewel in Old Mutual's crown,” said Nico Smuts, an analyst at 36ONE Asset Management, in an e-mail.
The OM Asset Management business, which trades in New York, could also be spun off to investors, said Brad Preston, chief investment officer of Mergence Investment Managers, who also said some analysts see a 20% “conglomerate discount” in Old Mutual stock. The company's emerging markets business might be listed on the Johannesburg bourse, Mr. Preston said.
Bloomberg contributed to this story.
