Following Prudential’s announcement that it would be merging M&G with its UK savings business, Old Mutual has confirmed in its interim update that it will be listing two further businesses as part of its “managed separation” strategy.
After undertaking a strategic review with chief executive Bruce Hemphill (pictured) at the helm, Old Mutual decided to spin-out its four core businesses to unlock value trapped within the group structure.
Hemphill identified the two entities as Old Mutual Limited, a new South Africa holding company, spanning its emerging markets division, and another group comprised primarily of its UK wealth management business, Old Mutual Wealth (OMW).
While there was no explicit mention of intentions to sell either entity, Hemphill did hint that this process would likely involve the demerger of OMW, with the possibility of an initial public offering.
He also reiterated that the group was on track to complete the “managed separation” of its four core units by the end of 2018.
The insurer’s Old Mutual Wealth brand, comprising its Old Mutual Global Investors (OMGI), Quilter Cheviot and Intrinsic platform operations, delivered another strong quarter of growth, after a record breaking first quarter.
Net client cashflow for the division grew 53% to £4.9bn over the first half, while its pre-tax adjusted operating profit was boosted 29% to £134m.
OMW’s funds under management (FUM) ended the period at £127.3bn, up 10% from £115.3bn a year ago.
One of the group’s best performing areas was its OMGI multi-asset division, which recorded net flows of £1.6bn, including £1.4bn sales for its Cirilium fund, which now has FUM of £6bn.
Another big name in its stable of funds, the Global Absolute Equity Return strategy attracted £2.9bn in sales over the period.
OMGI’s total inflows over the first half of the year exceeded its positive flows for the entirety of 2016, up a respectable 106% at £3.3bn.
Its discretionary manager proposition Quilter Cheviot, which the firm purchased in October 2014 for £585m, saw 50% higher net client cashflows of £0.6bn, compared with flows of £0.4bn in H1 2016, which were affected by low investor confidence ahead of the Brexit vote.
Quilter Cheviot’s FUM was up 9% from the start of the year to £22.5bn, but £0.3bn of this increase was from its acquisition of Attivo Investment Management.
Losses sustained by its Intrinsic business swelled from £9m over H1 2016 to £13m for H1 2017 on the back of higher contributions to the Financial Services Compensation Scheme.