Details of separation of OM, Nedbank

Exposure reduced to 19.9%

FINANCIAL services group Old Mutual plc yesterday gave further details of its muchtouted managed separation and 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.

The group said 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.

It said the holding company, Old Mutual Limited (OML), would have its primary listing on the JSE and a secondary listing on the London Stock Exchange.

The group said OML would be listed on both exchanges at the earliest opportunity in 2018 following the publication of Old Mutual plc’s 2017 full-year results announcement.

Nedbank said OML would not sell its shareholding in the bank.

“OML announces today (Wednesday) that it has agreed with Nedbank that, subsequent to the unbundling of the majority of its shareholding, the remaining minority holding will be 19.9 percent, providing a foundation for the continued strategic relationship between the two businesses,” the company said.

Old Mutual made a complex review of its businesses in 2015.

Under the strategy, the group said it would separate them into separate entities as keeping them in one had proved costly. It said it would separate the group’s four assets – Old Mutual Emerging Markets, Old Mutual Wealth, Old Mutual Asset Management and Nedbank.

The break up of Old Mutual is being overseen by Rob Leith, a former investment banker who had worked with Standard Bank and Russia’s Sberbank, and who joined Old Mutual as director of managed separation in early 2016.

Asief Mohamed, the chief investment officer at Aeon Investment Management, yesterday said that when Old Mutual listed in 1999, its management had the obsession to diversify its business away from South Africa and 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.

“Had they stayed focused on South Africa significant excess capital could have been returned to South African shareholders and policyholders,” Mohamed said.

Old Mutual shares rose 1.01 percent on the JSE yesterday to close at R36.02.