Old Mutual completes sale of its Italian arm

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 54 percent 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.