The well-known Financial services group, Old Mutual, will now be called Old Mutual Emerging Markets, Old Mutual Wealth, the Nedbank Group, and Old Mutual Asset Management as the group’s management has finalized means to split up into these four units.
The Anglo-South African company said its current structure was “too costly” and inefficient to operate and that the changes experienced by the regulatory environment in Europe and South Africa had also made the business more complex to run, the financial service firm announced on Friday March 11th.
The decision also came at the time when the firm reported a 4% rise in its annual pre-tax adjusted operating profit to £1.7 billion. The firm said it expected the separation of its four main units to be completed by the end of 2018.
Bruce Hemphill, Old Mutual’s chief executive, explained that the company is taking a “bold course” in a bid to adjust, cut costs and streamline its businesses. Hemphill joined the company last November from Standard Bank.
Analysts pointed out that the company’s decision followed the steep fall of the South African rand especially as more than half of the company’s earnings are in the South African currency. However, Old Mutual’s dividend is paid in pounds
The strategy we have announced today sets out a bold new course to unlock value currently trapped within the group structure.
We have four strong businesses that can reach their full potential by freeing them from the costs and constraints of the group.
These businesses are performing strongly, have excellent competitive positions in sizeable markets and the underlying growth potential to flourish independently.
The group, which was founded in South Africa in 1845, currently has a majority stake in South African lender Nedbank. But it plans to reduce it to a minority stake by the end of 2018.
Though the group is yet to decide how it would go about spinning off the units, its strategic review was announced in November after former Standard Bank executive Mr Hemphill took over as chief executive.
The company’s Old Mutual Wealth unit, a sponsor of England rugby union, is said to have also received a takeover approach from private equity firms, according to reports citing unnamed sources.