Old Mutual sells more of Omam to HNA Capital

A further 14.5% for Chinese conglomerate

OLD MUTUAL yesterday took another major step in its unbundling process when it sold 14.5 percent of its stake in OM Asset Management (Omam) to HNA Capital US, the financial services arm of Chinese conglomerate HNA Group, for $251.4 million (R3.61 billion) – leaving it with a holding of 5.5 percent in Omam.

Old Mutual said the reduction in its shareholding in Omam post the transaction would also result in changes to the Omam board.

“As a consequence of the reduction in shareholding today, and in accordance with the articles of association and the shareholders’ agreement at the time of the IPO, Ingrid Johnson, Old Mutual’s group finance director, will step down from the board of Omam with immediate effect,” the company said yesterday.

The UK-based Omam operates as a multi-boutique asset management firm with $235.9bn of assets under management as of September 30, 2017. It provides its services to both individuals and institutions. This is the second tranche of Omam shares Old Mutual has sold this year.

The Anglo-South African financial services firm in March sold a 24.95 percent shareholding in Omam for $446m in cash to HNA.

The group last year announced a “managed separation” process that would result in the dual-listing of its UK asset management and African emerging markets businesses in London and Johannesburg and reduced stakes in Omam and Nedbank.

The group last week said it would reduce its exposure in Nedbank to 19.9 percent from 54 percent on the completion of its four-way breakup by the end of the year.

Nedbank, one of South Africa’s largest banks, would distribute Old Mutual’s shares among shareholders in a new South African holding company that would also house its emerging market activities.

In September this year, the group decided to separate Old Mutual Global Investors’ multi-strategy investment team from its single strategy one, arguing that both were strong enough to survive on their own before Old Mutual completes its unbundling next year.

Last month, Old Mutual said it might dispose of its subsidiaries in China, Colombia, Mexico and Uruguay as part of its managed separation process. It has already sold its Indian joint venture stake to Kotak Mahindra Bank for $205m.

Asief Mohamed, the chief investment officer at Aeon Investment Management, said Old Mutual’s unbundling was ironic.

“When Old Mutual listed in July 1999, its management had the obsession to diversify its business away from South Africa.

“This was a value-destroying exercise of unmitigated proportions.

“Subsequent to this listing, for a number of years it acquired assets offshore that largely destroyed value,” Mohamed said.

The breakup of Old Mutual is being overseen by Rob Leith, a former investment banker.

Old Mutual shares rose slightly by 0.03 percent to close at R36.21 on the JSE yesterday.