Weekend news reports claim that Old Mutual plans to break up the group into stand-alone companies, for among other reasons, to reduce the hefty costs of its London headquarters and listing on the London Stock Exchange (LSE).
The affected companies involve its UK-focused wealth business, the Old Mutual Emerging Markets based in SA, Institutional Asset Management, as well as Nedbank, which experts say could make the bank a potential acquisition target.
Old Mutual owns a 40% stake in Nedbank.
Responding to speculation that arose from a Sky News report on Saturday, Old Mutual said that its newly appointed CEO Bruce Hemphill had called for a strategic review of the business unit to be conducted, and confirmed that the options generated from the review “are being considered, but no decision has yet been made”.
The company said an update on the review would be delivered on Friday when it releases its preliminary 2015 financial results.
With the majority of the group’s profits generated in SA, industry experts say making a primary listing on the JSE would save a significant amount of money given the amount that is currently being spent on its London head office and LSE listing.
“Any move that helps reduce Old Mutual’s substantial overhead costs would be welcomed by investors,” Wayne McCurrie, Momentum Wealth portfolio managers head was quoted saying.
Sky News reported that private equity firms London-based Cinven and New York-based Warburg Pincus have reportedly already tabled a multi-billion-pound joint cash offer for Old Mutual Wealth.