Old Mutual on Friday confirmed that it will split up its four main business units, including Nedbank.
It follows a report from Sky News last week reported that the financial services group was working on a £9 billion plan to break-up the company into standalone entities, comprising its stake in Nedbank‚ its UK-focused wealth unit‚ its emerging markets operation based in SA‚ and its institutional asset management business.
On Friday Old Mutual said that Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank and OM Asset Management, with combined pre-tax operating profits of £1.8 billion, would be separated.
Old Mutual noted that Nedbank , which boasts 7.4 million retail clients in South Africa, remains an independent entity listed on the JSE.
At 31 December 2015, Nedbank Group was 54.1% owned by Old Mutual Life Assurance Company (South Africa) and associated South African companied in the Old Mutual group, which are in turn ultimately owned by Old Mutual.
Analysts have speculated that following its separation from Old Mutual, Nedbank could become an acquisition target.
“The announcement of the Old Mutual Managed Separation will have no impact on the strategy or day to day management or operations of Nedbank Group or its staff or clients,” Old Mutual said.
The company said it expected the separation to be materially completed by the end of 2018.
In reporting results for 2015, Old Mutual CEO, Bruce Hemphill, pointed to a ‘new strategy to separate underlying businesses and unlock value’.
“These businesses are performing strongly, have excellent competitive positions in sizeable markets and the underlying growth potential to flourish independently,” he said.
“Our new strategy will allow each business to have simpler access to capital markets to fund its growth more easily and be valued more appropriately, with more straight forward regulatory arrangements.”
“We are announcing today a strategy that will allow us to release the potential within the Group for the benefit of all its stakeholders for many years to come,” Hemphill said.
Last week, Barclays announced that it will be selling down its stake in Barclays Africa Group Limited – trading as Absa in South Africa.