Old Mutual tipped to sell UK operations for £4 billion

Approach comes as chief executive steps up plans to break up the group

Insurance News

By Paul Lucas

In what could be a further sign of consolidation in the life insurance and wealth management industries, South African insurance giant Old Mutual is being tipped to sell its UK operations, Old Mutual Wealth for a possible £3 billion to £4 billion.

According to a Financial Times report, an approach has been made for Old Mutual Wealth which sells both wealth and asset management products across Italy and the UK with £119 billion in assets and profits of £307 million last year. A potential break-up of Old Mutual has been on the cards for several months, with Bruce Hemphill, the company’s chief executive, having outlined plans to create a series of more specialist businesses that could potentially hold greater appeal to a different blend of shareholders.

As part of the break-up it is expected that a 66% stake in US-based OMAM will be sold; with Old Mutual Wealth, of the UK, to be floated in London or sold. That would leave the company with its South African insurance business, as well as Old Mutual Emerging Markets and a 54% stake in Nedbank. The split is predicted to be completed by 2018.

An investor day was held yesterday in London to outline the merits of each business with the costs of a break-up also outlined. They would include the winding down of the company’s head office in London at a cost of £50 million to £65 million.

The potential move would come hot on the heels of the decision from Deutsche Bank to sell Abbey Life to Phoenix Group – with both AXA and Aegon having sold UK businesses earlier in the year.

Related stories:
Old Mutual completes £183 million investment
Old Mutual to cut London head office staff by 50%

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