Financial services company Old Mutual is preparing to sell its Italian wealth management unit as part of a wider plan to break up its business, cut costs and revamp earnings, sources familiar with the matter said on Thursday.
The Anglo-South African group, which has been present in Italy since 1997, has asked financial advisory group Rothschild to sound out potential bidders for its Milan-based subsidiary which could be valued at up to 300 million euros ($341.88 million), the sources said.
The unit, known as Old Mutual Wealth Italy, is part of the group’s wider wealth management business but is expected to be sold separately as it operates as a standalone unit, the sources said.
“There is little integration with the rest of the business and it would be easy to carve it out,” one source said.
On March 11, Old Mutual said it would split into four businesses, namely a South African bank, an emerging markets unit, a U.S. asset manager and a wealth manager in Britain.
Rothschild is overseeing the global portfolio reorganization which will result in a string of divestments, the sources said.
A spokesman at Old Mutual declined to comment on the sale although he said that the group is “in the process of a managed separation and this will inevitably lead to speculation concerning its assets”.
Rothschild declined to comment.
Old Mutual, which has a market value of close to 10 billion pounds and has roughly 320 billion pounds of assets under management globally, has said its break-up plan would complete by the end of 2018. It recently appointed an executive, Rob Leith, to manage the split.
Italy, which accounts for less than 5 percent of Old Mutual’s overall wealth management activities, would be the first chunk of that division to be spun out, the sources said.
An auction to find a new owner for the Italian subsidiary, which manages assets worth 6 billion euros, could kick off by mid May, the sources said, cautioning no deal was certain.
POTENTIAL BIDDERS
In Italy Old Mutual specializes in so-called unit-linked investment products which combine elements of insurance with investments in the stock market, so that the risk lies more with the customer rather than the insurer.
Private equity funds including Cinven, Apollo and JC Flowers have signalled interest in the asset as they’re trying to raise their exposure to Italy’s financial services sector, two of the sources said.
The list of industry buyers is tight with Swiss insurer Zurich seen as a likely contender, they said.
The vast majority of European insurers is instead unwilling to get involved as they grapple with record low interest rates and regulatory headwinds, the sources said.
Zurich and Cinven declined to comment while spokesmen at Apollo and JC Flowers were not immediately available for comment.
Italy has seen a number of insurance-focused deals over the past 18 months. In November, Cinven took control of insurer Ergo Italia, part of German insurance company Ergo Group, while in June JC Flowers closed a deal to buy almost 80 percent of Eurovita Assicurazione.
Last year, Apollo bought Carige Assicurazioni and Carige Vita Nuova from troubled Italian lender Carige and is now in talks to buy a controlling stake in the bank by acquiring the bulk of a 550 million euro share issue.
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