OLD Mutual will retain “an appropriate strategic minority stake” in Nedbank after distributing “a significant proportion” of the bank’s shares to its shareholders, CEO Bruce Hemphill said at the insurance group’s annual general meeting on Tuesday.
The group is in the process of stripping itself down to Old Mutual Emerging Markets (OMEM) by unbundling its US operation, OM Asset Management (OMAM); its UK operation, Old Mutual Wealth (OMW); and Nedbank.
Hemphill told shareholders the exact level OMEM would retain in Nedbank had not been determined yet.
It would be “based on OMEM’s commercial relationship with Nedbank and influenced by the implications of the incoming Twin Peaks regulation. The boards of directors and management teams of Old Mutual and Nedbank continue to work closely together on these matters.”
Nedbank issued a statement on Tuesday in which CEO Mike Brown said: “The update on the managed separation provided by Old Mutual in respect of Nedbank Group is in line with our expectations of the process and confirms that it remains business as usual for Nedbank.”
“We have started executing the managed separation and I am pleased with the progress that we have made since the announcement three months ago. We are now in a position to provide further guidance on our plans. Increased market volatility following the referendum decision to leave the EU does not affect our strategy, although it may impact the performance of the underlying businesses,” Hemphill said.
Old Mutual intended to continue the phased reduction of its 65.8% holding in OMAM in an orderly manner while supporting the development of its strategy, as evidenced by its recently announced acquisition of a majority stake in Landmark Partners.
“We intend to pursue one or more transactions in the context of the managed separation which will ultimately deliver two separate entities, listed on both the London and Johannesburg stock exchanges, into the hands of Old Mutual’s shareholders,” Hemphill said.
“One will consist principally of the group’s wealth operations and the primary means of achieving this outcome is likely to be through a demerger. The other will consist principally of the emerging markets operations through the creation of a new South African holding company. There are various means to achieve this outcome and we will update the market on the precise steps we intend to follow in due course.”