Old Mutual’s OM Asset Management plc sale announced at $US14.25 per share

Old Mutual’s OM Asset Management plc has announced the pricing of an underwritten public offering of 13 million of its ordinary shares at a price of US$14.25 per share.

The ordinary shares are being offered by Old Mutual plc, through its wholly-owned subsidiary, OM Group (UK) Limited. It is expected to close the deal on 19 December 2016, the company said in a statement announcing its intentions.

The public offering of New York Stock Exchange-listed OMAM, is the beginning of Old Mutual’s move towards breaking its business into four separate units. 

As reported in March, Old Mutual has announced plans to break up its business into four parts by the end of 2018, in an effort to “unlock value” trapped inside the group structure.

In addition, the South African financial giant has announced a private repurchase transaction, in which OMAM expects to repurchase 6 million ordinary shares directly from OM Group (UK) Limited was also priced at US$14.25 per share. The closing of the repurchase transaction is subject to various conditions, including the closing of the public offering.

The proceeds to Old Mutual from the proposed offering and repurchase agreement are expected to be used for general corporate purposes, the statement added. OMAM will not sell any shares in the offering and will not receive any proceeds from the sale of the shares.

Bank of America, Merrill Lynch, Morgan Stanley & Co. LLC, Citigroup, Credit Suisse Securities (USA) LLC and Evercore ISI are acting as joint bookrunning managers for the public offering. 

The underwriters also have a 30-day option to purchase up to an additional 1.95 million ordinary shares at the public offering price, less the underwriting discount.

Company break-up

As a business Old Mutual provides investment, savings, insurance and banking services to 18.9m customers in Africa, the Americas, Asia and Europe. Originating in South Africa in 1845, Old Mutual has been listed on the London and Johannesburg Stock Exchanges, among others, since 1999. 

The break-up, or managed separation of the Old Mutual business will see the firm separating its four businesses into standalone entities.

The four parts of the business are: 

Old Mutual Emerging Markets, which provided long-term savings, protection, investment and lending to retail and corporate customers in South Africa; Nedbank, one of South Africa’s top four banks, providing wholesale and retail banking, insurance and asset management for individuals and businesses in which Old Mutual owns a 54% stake; 

Old Mutual Wealth, the company’s  wealth management business in the UK and international markets and OM Asset Management, that provides a range of investment strategies and products for institutions, delivered worldwide through eight US-based boutiques, in which Old Mutual currently owns 66%. 

According to company figures, for the year ended 31 December 2015, Old Mutual reported an adjusted operating profit before tax of £1.7bn and had £304bn of funds under management. 

ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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