Old Mutual exits Indian joint venture

Sale is part of several planned market exits to concentrate on high-earning businesses in African region

Old Mutual exits Indian joint venture

Insurance News

By Gabriel Olano

Old Mutual, a British-South African financial group, will sell its 26% stake in India joint venture Kotak Mahindra Old Mutual Life Insurance, signifying its exit from the market upon the deal’s completion.

On Friday, Old Mutual CEO Bruce Hemphill announced that it is selling its stake to its joint venture partner Kotak Mahindra Bank for INR12.9 billion (US$200 million). He also said that the proceeds of the sale will go to general corporate purposes.

The move is part of Old Mutual’s plan to separate its four core units through a series of disposals. This will also see the firm’s emerging markets arm exit several markets outside Africa.

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Old Mutual will instead focus its efforts towards its profitable business operations in sub-Saharan Africa, as well as step up its investments in East and West Africa.

Adrian Cloete, portfolio manager at PSG Wealth, told Business Live that Old Mutual can expect a profit on the Kotak sale.

“Management expects to receive a net consideration the equivalent of £141 million (US$182 million) and as the carrying value [at December 2016] of the stake was only £45 million (US$58.1 million), they should realise a profit of £96 million (US$124 million) — about 0.5% of its market value,” Cloete said.

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