The National Treasury, SA Reserve Bank and Financial Services Board have reacted positively to Old Mutual’s plans to separate its activities into four separate businesses, including a standalone Nedbank and Old Mutual Emerging Markets (OMEM) business.
The Treasury, Sarb and the FSB said in a joint statement on Friday morning that Old Mutual has been in regular contact with them over the course of the strategic review (the past couple of months).
Old Mutual does not intend to sell its share in Nedbank to a new strategic investor.
“The consultation and dialogue has been constructive, and there is a commitment by the boards of directors and management teams of Old Mutual, Nedbank and OMEM to execute the managed separation in a way that safeguards the stability and integrity of both the South African businesses and the South African financial services sector more broadly.
“OMEM and Nedbank are each significant businesses in their own right with strong balance sheets. The enhanced ability of these businesses to access their natural shareholder base is welcomed; as is the increased alignment of the key governance structures and lead supervision with the location of the respective businesses. This will have positive benefits for the South African economy and capital markets,” the joint statement reads.
The statement further states that Old Mutual’s strategic review concluded that there are limited tangible synergies between the businesses in the Group and the current Group structure inhibits the efficient funding of future growth plans for the individual businesses. The evolving regulatory environment adds a degree of further cost, complexity and constraints because of the current Group structure.
Therefore, as part of this managed separation, Old Mutual has stated its intention, in time, to reduce its shareholding in Nedbank to an appropriate strategic minority position. The exact mechanism to achieve any reduction in Old Mutual’s shareholding in Nedbank has yet to be finally determined.
Old Mutual has however said that it currently envisages reducing its shareholding in Nedbank primarily by way of a distribution of Nedbank shares to the shareholders of Old Mutual in an orderly manner and at an appropriate time.
According to the joint statement Old Mutual does not intend to sell any part of its shareholding in Nedbank to a new strategic investor.
“The managed separation process will involve ongoing regulatory engagement. The FSB and the Reserve Bank will work with Old Mutual and Nedbank to ensure that any potential execution risks are mitigated,” the joint statement said.