The new locally based business will be part of the group’s separation
By HILARY JOFFE
Trevor Manuel. Picture: SUNDAY TIMES
The South African-based emerging markets business Old Mutual will list on the JSE in 2018 as part of its managed separation could ultimately be worth R100bn to R110bn, making it smaller than Sanlam but bigger than Discovery and the other listed life assurers, analysts say.
London-listed Old Mutual said last week the managed separation, revealed a year ago, would see it break up into its four underlying businesses and close its London head office.
The group’s emerging markets business, which includes Old Mutual’s life, asset management, insurance and lending businesses, as well as its controlling stake in Nedbank, will be coming home to SA as an independent company with a primary listing on the JSE.
Investec Asset Management fund manager Chris Steward said the market value of the new company was likely to be about R120bn to R130bn, of which Nedbank accounted for 40% to 45%. This would drop to R100bn to R110bn once Old Mutual unbundled about two-thirds of its Nedbank interest to shareholders.
Last week, Old Mutual appointed former finance minister Trevor Manuel as chairman of Old Mutual Emerging Markets. Manuel, who also chairs the holding company for Old Mutual’s South African assets, would also become chair of the new and as yet unnamed “SA Topco”, which will become the new JSE-listed company.
Old Mutual’s emerging markets business recorded compound annual growth in pretax adjusted operating profit of 8% between 2006 and 2016, said Old Mutual CEO Bruce Hemphill.
The group has said the separation will be “materially complete” by the end of 2018. By then the two independent entities will be separately listed, the emerging markets business on the JSE and the UK wealth management business in London. The other two businesses – Nedbank and Old Mutual Asset Management in the US – are already listed.
The group has begun down-selling its interest in US subsidiary OMAM, the proceeds of which will be used to meet the costs of the separation and pay debt, analysts say.
On Wednesday, Hemphill said Old Mutual would probably retain a strategic stake of 15% to 20%. The group has said it will focus on sub-Saharan Africa, raising the question of whether it will sell its assets in other emerging markets.
Citadel Asset Management chief strategist Adrian Savill said all of SA’s large life assurers were vulnerable to disruption by technology. “But a very clear market differentiator is Old Mutual’s strong potential competitive position in the sub-Saharan African context.”
Steward said Old Mutual’s life and asset management businesses had a solid market share in SA and a good distribution footprint, and had the potential for growth in underperforming markets in Africa.
BusinessDay
