Old Mutual plc confirmed on Tuesday that it is selling its Italian business, Old Mutual Wealth Italy, to ERGO Italia, for €278m in cash, plus interest to completion.
ERGO Italia is an insurance business owned by Cinven, the European private equity firm, which acquired it last year from Germany’s ERGO Group.
The deal, is expected to complete within six months, subject to regulatory approvals, Old Mutual said in a statement.
The company noted that the sale of Old Mutual Wealth Italy represented the final part of the divestment of the continental European businesses of its Old Mutual Wealth division, which would allow OMW to “focus on its core UK and cross-border markets”.
Old Mutual Wealth Italy was established in 1997. It currently employs 110 people and manages €7bn, for more than 53,000 affluent and high-net-worth clients, according to Old Mutual.
It generated a post-tax adjusted operating profit for 2015 of €22m.
Old Mutual Wealth chief executive Paul Feeney said the Old Mutual Wealth Italy operation was “a strong, successful and profitable business that has made a positive contribution to Old Mutual Wealth in recent years”, but that its growth prospects would be “enhanced under Cinven and ERGO Italia’s ownership”.
Cinven partner Caspar Berendsen noted that growing European insurance businesses has become a Cinven specialty, and that Cinven looked forward to developing the Old Mutual Wealth business in Italy ” through acquiring scale and providing differentiated products and distribution channels”, in association with its existing ERGO Italia business.
As reported here in June, Old Mutual Wealth has announced plans to de-merge from its parent and list on both the London and Johannesburg stock exchanges. The likely date of the listing hasn’t yet been set.
In a statement aimed at updating the market on what it has been calling its “managed separation” of its business into four separate entities, announced earlier this year, Old Mutual plc also said at that time that it was also planning to create a “new South African holding company”.
In announcing the managed separation, Old Mutual said it was taking the action to maximise shareholder value.