Old Mutual stays on course for break-up as pre-tax profits leap

ANGLO-SOUTH African insurer Old Mutual has promised it is on track to chop itself into four next year as its profits raced higher for the six months to June 30.

The FTSE 100 firm’s pre-tax profits climbed 37pc to £969m for the period, boosted by the weakness in sterling against the rand but also a reduction in debt as it slashed its stake in its US asset management arm.

With the break-up plan that first emerged last year on course, bankers are now preparing to list the group’s UK wealth management business and a holding company covering its emerg- ing markets unit next year.

That ends speculation that Old Mutual Wealth could be the subject of a takeover battle, with Paul Feeney, the chief executive, noting that a listing is his preferred option.

“I’m excited when I get a chance to stop and draw a breath,” he said of the forthcoming changes, adding that the first half figures were a “great base for listing this business”.

The wealth manager raked in £17m in performance fees during the period, versus nothing a year ago, while its adjusted operating profits shot up 29pc to £134m and its net inflows almost doubled to £4.9bn.

Mr Feeney said he was not planning a strategy overhaul as a result of the change, adding that any management rejigs ahead of the planned listing have also now taken place. It hired Aldermore’s chairman Glyn Jones last November, for example.

A roadshow for the listing is expected later this year, with bankers from Goldman Sachs, JP Morgan and Rothschild understood to have roles in this process.

Old Mutual Limited – a holding company being set up to cover the emerging markets business, the group’s stake in South Africa’s Nedbank and Old Mutual plc – is also due to float in London and Johannesburg next year.

Group chief executive Bruce Hemphill said the focus now is to separate the standalone balance sheets for the two unlisted businesses and then “subject to the necessary approvals, deliver them to our shareholders at the earliest opportunity in 2018”.

Old Mutual, which was set up in South Africa in 1845 and has since offered insurance, investment and banking assets to customers across South Africa, the US and the UK, said its markets “remain subject to significant political and economic uncertainties”.

It unveiled a dividend boost of 32pc to 3.53p a share. However shares in the group fell 3.1pc, or 6.2p, to 195.3p yesterday.