Old Mutual has announced its intention to list Old Mutual Wealth as a separate entity on the London and Johannesburg stock exchanges in a demerger as the group updated on its "managed separation" plans.
In the initial announcement in March, Old Mutual said the managed separation "may involve equity market activity" for Old Mutual Wealth and Old Mutual Emerging Markets, while its other entities Nedbank and US-based OM Asset Management are already publicly traded.
This morning, the group announced its intention to deliver Old Mutual Wealth "into the hands of Old Mutual's shareholders by way of a demerger" and listing on both the London and Johannesburg stock exchanges.
Meanwhile, the group is also planning to create a new South African holding company for its Emerging Markets operations.
The statement said: "We intend to pursue one or more transactions in the context of the managed separation which will ultimately deliver two separate entities, listed on both the London and Johannesburg stock exchanges, into the hands of Old Mutual's shareholders.
"One will consist principally of the group's Wealth operations and the primary means of achieving this outcome is likely to be through a demerger. The other will consist principally of the Emerging Markets operations through the creation of a new South African holding company. There are various means to achieve this outcome and we will update the market on the precise steps we intend to follow in due course."
Old Mutual Wealth CEO Paul Feeney (pictured) commented: "Today's announcement is a clear endorsement of our vertically integrated strategy and the strength and readiness of our business for the next stage of our corporate journey.
"Old Mutual Wealth is a purpose-led, responsible business, building simple end-to-end solutions for real customer needs, accountable for helping create prosperity for the generations of today and tomorrow."
The Old Mutual Emerging Markets arm will retain an "appropriate strategic minority stake in Nedbank", with the exact level still to be determined in cooperation with the entity.
The group also announced it would be holding a general meeting today to consider a revised directors' remuneration policy and adoption of a new long-term incentive plan, following a shareholder revolt over chief executive Bruce Hemphill's pay package.
Separation
Meanwhile, Old Mutual also revealed it has begun winding down its London head office, where full time staff headcount has been reduced by 15%, a number that is expected to increase as the managed separation continues.
However, senior management had been reinforced with specialist capabilities added for the execution of the managed separation, including Rob Leith to the group executive committee as director of managed separation.
Commenting on the update, Hemphill said: "We have started executing the managed separation and I am pleased with the progress that we have made since the announcement three months ago. We are now in a position to provide further guidance on our plans.
"The expected headwinds of weaker and more volatile foreign exchange and equity markets to which we made reference at our preliminary results have materialised. However, the average value of the rand year-to-date 2016 has decreased by 22% as compared to the first half of 2015. We continue to keep operational management focused on maximising returns
"We are working intensively with the businesses to prepare them for separation. We remain confident that the managed separation process will lead to the creation of shareholder value, and strong businesses for our customers, staff and other stakeholders."
The group said it is also continuing its phased reduction of the 65.8% holding in Old Mutual Asset Management "in an orderly manner while supporting the development of its strategy, as evidenced by its recently-announced acquisition of a majority stake in Landmark Partners".
Both Feeney and Hemphill referred to the outcome of the EU referendum in their statements, as they warned of further volatility.
Feeney said: "What the landscape will look like when the UK extracts itself from the EU is far from clear. It is our expectation that the outcome of the EU referendum vote will continue to drive increased levels of market volatility.
"Our focus is on our customers, on managing their assets and helping them navigate through these uncharted waters. We will not lose our focus on this task."
Hemphill added: "Increased market volatility following the referendum decision to leave the EU does not affect our strategy although it may impact the performance of the underlying businesses."
The group also said that an extended period of a weaker rand would have an impact on our reported sterling results and lower equity market levels may put pressure on revenues.
No dates were given on the potential demerger of Old Mutual Wealth but the managed separation is expected to be complete by 2018.
