Financial services group Old Mutual says a plan to sell a part of its UK wealth business to institutional investors is taking shape, after being approved by shareholders.
The share allocation forms part of what Old Mutual plc calls a managed separation process, which will become a reality in June when businesses that the company is spinning off come to the market in London and Johannesburg.
The wealth business, Quilter, will have its primary listing in London and a secondary inward listing on the JSE. Quilter provides investment advice and investment platforms to about 900,000 customers.
Institutional investors will be allocated 9.6% of the Quilter shares, at a price range yet to be determined. Existing Old Mutual plc shareholders will receive an additional 87% of Quilter shares, while the Quilter management and staff will get the remaining balance.
Old Mutual Ltd, which houses the core emerging- market businesses, will also list on the JSE. The emerging market segment has under its wings insurance and asset-management businesses predominantly in Africa. Old Mutual plc has previously estimated the benefits to shareholders could reach more than £2bn.
"The two entities on a stand-alone basis are much cleaner, simpler and focused," said Bradley Preston of Mergence Investment Managers. "The key question, though, will be ... Quilter’s valuation, given that the company has taken a few missteps on IT spend."
The two new listings will see Old Mutual plc shareholders receive three Old Mutual Ltd and one Quilter share in exchange for every three Old Mutual plc shares they own. As part of the managed separation process, the 54% stake in Nedbank will be unbundled to shareholders, leaving Old Mutual plc with a 19.9% interest.
The share price has gained about 4% to £2.42 in London in 2018, giving it a market value of £12bn.
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