Old Mu­tual com­pletes sale of its Ital­ian arm

The Star Early Edition - - BUSINESS REPORT - Ka­belo Khu­malo

AS PART of its con­sol­i­da­tion into four core ar­eas, fi­nan­cial ser­vices group, Old Mu­tual says it has com­pleted the sale of its Ital­ian arm, Old Mu­tual Wealth Italy (OMWI) to Phlavia In­ves­ti­menti, pre­vi­ously ERGO Italia, for €278 mil­lion (R4 bil­lion).

The group first an­nounced the sale of its Ital­ian arm last year af­ter the firm an­nounced that it had en­tered into short­term ne­go­ti­a­tions with Cin­ven, the own­ers of Phlavia.

Old Mu­tual Wealth’s chief ex­ec­u­tive, Paul Feeney, said yes­ter­day that the sale was the fi­nal part of the dis­in­vest­ment of the com­pany’s Euro­pean busi­ness and would al­low it to fo­cus on its core UK and cross-bor­der mar­kets.

“This rep­re­sents an im­por­tant land­mark for our busi­ness as it com­pletes Old Mu­tual Wealth’s exit from con­ti­nen­tal Europe,” said Feeney.

The sale forms part of Old Mu­tual’s chief ex­ec­u­tive, Bruce Hem­phill’s strate­gic re­view of the busi­ness, which en­tailed split­ting the group into four stand-alone en­ti­ties.

Pub­lic of­fer­ing

The com­pany owns 54per­cent of Ned­bank and 51per­cent in New York-listed Omam.

As part of pre­par­ing for the split, the com­pany last month re­duced its stake in Omam from 66 per­cent af­ter it sold 13 mil­lion shares in Omam through a pub­lic of­fer­ing.

Omam said it had agreed to re­pur­chase 6mil­lion or­di­nary shares from Old Mu­tual.

Nico Smuts, an in­vest­ment an­a­lyst at 36ONE As­set Man­age­ment, said yes­ter­day that the con­clu­sion of the deal was a step to­wards the com­pany’s split.

“The com­ple­tion of this trans­ac­tion marks a small but im­por­tant step in Old Mu­tual’s man­aged sep­a­ra­tion process, which aims to dis­pose of non­core as­sets and re­duce group debt be­fore split­ting the busi­ness into four key com­po­nents,” said Smuts.

Old Mu­tual said yes­ter­day it was part­ing with a busi­ness that had bil­lions un­der man­age­ment.

“As at 31 De­cem­ber 2015. OMWI had €7bn of funds un­der man­age­ment and con­trib­uted €22m of post-tax earn­ings for the year end­ing De­cem­ber 2015,” it said.

Reuben Beelders, an an­a­lyst at Gryphon As­set Man­age­ment, said yes­ter­day that the mar­ket was wait­ing to see how Old Mu­tual would un­bun­dle seg­ments of its busi­ness.

“If you look at the €22m (that) OMWI con­trib­uted to the group’s over­all op­er­at­ing profit of £1.7bn (R29bn), it is a fairly small trans­ac­tion but does in­di­cate the com­pany is pro­ceed­ing with its strat­egy. Th­ese small trans­ac­tions will not make a big dif­fer­ence to mar­ket per­cep­tion to how this busi­ness will even­tu­ally be un­bun­dled,” said Beelders.

Old Mu­tual shares fell 1 per­cent yes­ter­day to R34.56.

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