Old Mutual is to split itself up into four separate businesses, the financial services firm officially announced on Friday (11 March). The company will divide into Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank Group and OM Asset Management. The splitting operation is expected to be finalised by the end of 2018.
The FTSE 100 company, which has around £300bn worth of assets under it portfolio, hopes to unlock value trapped in the group's structure. Bruce Hemphill, Old Mutual's chief executive, said the company is taking a "bold course" in a bid to cut costs and streamline its businesses.
"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 straightforward regulatory arrangements," Hemphill said. "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."
Old Mutual mentioned that there are limited tangible synergies between the businesses as another reason for the split. Hemphill also said that the strict regulatory environment in South Africa as well as Europe is leading to mounting costs, complexity and constraints.
The investment firm set out its new strategy along with its financial results. The company reported a 4% jump in pre-tax profit to £1.7bn. It introduced a 2% dividend hike, lifting the payout to 8.9p per ordinary share.
Earnings per share were up 8% in constant currency, lower than on an adjusted basis because of the weak value of the South African Rand. The South Africa-founded company still generates a large part of its profits in rand, which has been dented by the ongoing commodity crisis.