Old Mutual unit to list in the UK
Old Mutual’s South African shareholders will soon gain exposure to the UK’s £1-trillion retail wealth market on the listing of Old Mutual Wealth, one of the region’s largest wealth management companies.
Old Mutual’s South African shareholders will soon gain exposure to the UK’s £1-trillion retail wealth market on the listing of Old Mutual Wealth, one of the region’s largest wealth management companies.
The unit will list on the London Stock Exchange, with a secondary listing on the JSE, following the release of Old Mutual plc’s annual results in March and in order to complete the group’s managed separation.
As part of the break-up, Old Mutual Emerging Markets, renamed Old Mutual Ltd, will list on the JSE with a secondary listing in London.
Old Mutual plc shareholders would automatically receive shares in each of Old Mutual Ltd and the rebranded Old Mutual Wealth, which would lose the Old Mutual name, said CEO of the wealth unit, Paul Feeney.
Feeney was in SA last week to meet Old Mutual shareholders, more than half of whom are South African institutional and retail investors.
The listing was a great opportunity for local investors to get exposure to the UK’s booming wealth market, said Warwick Bam, an insurance analyst at Avior Capital Markets.
The UK was the world’s fourth-largest wealth management market, after the US, Japan and China, Feeney said.
The value of retail funds held by UK investors reached a record £1-trillion at the end of 2016, official figures show.
The market is also growing, fuelled by pension reforms that are driving a move to defined contribution funds. The changes allow retirees to draw down from their invested income rather than having to purchase an annuity.
“Old Mutual Wealth has a strong competitive advantage in the form of a large restricted adviser force, diverse asset management capabilities, a multichannel investment platform and scale benefits,” said Bam.
Old Mutual Wealth served “middle England”, including the mass affluent (those with at least £50,000 to invest at retirement), affluent and high net worth markets, said Feeney.
For the six months to June, its asset manager, Old Mutual Global Investors, attracted net flows of £3.3bn, exceeding the full-year 2016 figure.
Old Mutual Wealth’s net client cash flows rose 53% to £4.9bn for the period, while funds under management grew 10%, to £127.3bn. Its largest listed competitor, St. James’s Place, reported funds under management of £83bn at end-June.
Old Mutual Wealth’s listed peers have market values ranging from £983m to £5.8bn and are trading at forward price: earnings ratios of between 18 and 25 times.
Reports had set Old Mutual Wealth’s value at between £2bn and £5bn, Feeney said.
The business planned to include an initial public offer of 10% to 15% of the company on listing in an effort to grow its UK shareholder base.
The Old Mutual break-up is expected to remove what is known as the “conglomerate discount”, increasing the value of each of the four business units as they access their more natural shareholder bases.