Old Mutual Plots Course That Will Split 173-Year-Old Business

(Bloomberg) -- Old Mutual Plc’s shareholders received their final road map for businesses that are going their separate ways.

The London-based insurer, founded in South Africa in 1845, is splitting its four financial-services businesses through what it calls a managed separation, and on Friday it gave final details on what shareholders will get. It is hiving off its wealth management unit, emerging-markets business and Johannesburg-based lender Nedbank Group Ltd. after concluding that the company’s shares trade at a discount to the total value of the individual assets. In November, it completed the disposal of its U.S.-based OM Asset Management division, which has since re-branded itself as BrightSphere Investment Group Plc.

When first announcing the plan to shareholders in March 2016, Chief Executive Officer Bruce Hemphill joked that he was effectively working himself out of the job. The split is the culmination of a strategic review started by Hemphill when he took the post in November 2015, in an effort to boost profitability and reignite a share price that was trailing its peers. That day is closer, with Hemphill saying most of the work will be done by the end of the first half, ahead of schedule.

Here are the steps outlined in statements issued by Old Mutual on Friday:

• It will first deal with Quilter, the U.K. wealth-management business. The plan is to have a primary listing in London and a secondary listing in Johannesburg. Old Mutual wants to distribute 86.6 percent of the unit to shareholders and divest up to 9.6 percent through a sale to institutional investors.
• The next day will see Old Mutual Ltd. start trading. That’s the sub-Saharan African insurance, savings and asset management business, whose primary listing in Johannesburg is expected to occur on June 26. OML will become the holding company for Old Mutual Plc. It will have a listing on the London Stock Exchange and secondary listings on the Malawi, Namibia and Zimbabwe bourses.
• The third step, which will take place six months after the listing of OML, will see 32 percent of Nedbank unbundled to shareholders, with OML retaining a 19.9 percent stake.

The company is proposing to offer one share in Quilter and three OML shares for every three Old Mutual shares, according to the statement. While the final value still has to be determined, at current market prices OML shareholders would receive three Nedbank shares for every 100 OML shares they own.

A shareholder meeting will be held on May 25 to vote on the proposals.

“We are on track with our listing as part of the managed separation process,” OML CEO Peter Moyo said. “The listing of OML on the JSE will signal the return of Old Mutual to Africa.”

To contact the reporter on this story: Vernon Wessels in Johannesburg at vwessels@bloomberg.net.

To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, Keith Campbell, Jon Menon

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