Old Mutual said on Friday that the next stage of a planned break-up of the Anglo-South African financial services group would take place in June with the listing of its emerging market and UK asset management units.
The listings will see shareholders receive one share in new UK wealth management company Quilter and three in Old Mutual Limited for every three Old Mutual shares currently held.
Old Mutual has been working towards a break-up since 2016 after deciding that regulatory changes had made the firm too complex to run, and has already sold out of its US fund arm.
“There were four good businesses that did not need to be held together in a group structure,” Old Mutual Chief Executive Bruce Hemphill told Reuters by phone, adding that the firm’s share price had been suffering from a “conglomerate discount”.
Old Mutual’s shares, which have been trading close to multi-year highs on prospects for a break-up, closed little changed at 242.6 pence.
The next stage of the break-up will see the Old Mutual Wealth unit spun out and renamed Quilter, with a listing in London and Johannesburg, while the rest of the company, which includes the emerging markets unit, will list a day later in Johannesburg and London as Old Mutual Limited.
Under the Quilter demerger, existing Old Mutual shareholders will receive 86.6% of Quilter and up to 9.6% will be placed with institutional investors. The rest would be held on behalf of management and staff.
The fourth step of the company’s break-up plan will take place six months later and see Old Mutual Limited separate out its stake in South African lender Nedbank, by distributing 32% of Nedbank’s stock to Old Mutual Limited shareholders.
After that, Old Mutual Limited will retain a minority stake of 19.9% in Nedbank, it said.
Old Mutual is aiming for “material completion” of the break-up by the end of 2018. Hemphill stands to receive a bonus of up to 1,000% if it completes on schedule.
The Old Mutual break-up comes as other insurers and asset managers such as Prudential and Standard Life Aberdeen are also changing their structures to become more competitive.
The plan also follows an agreement by Old Mutual to sell part of its asset management arm, Old Mutual Global Investors, to private equity firm TA Associates and management for £600 million.
Bernstein analysts valued Old Mutual Wealth at £2.8 billion excluding Old Mutual Global Investors.