Old Mutual shortlists four buyout funds for Italian wealth unit deal - sources

By Pamela Barbaglia

LONDON, June 20 (Reuters) - Four private equity funds have made it through to the final stages of an auction to buy the Italian wealth arm of Old Mutual (Other OTC: ODMTY - news) as the financial services group presses ahead with a break-up plan, sources familiar with the matter said.

European private equity firm Cinven has moved to the next round of bidding alongside U.S (Other OTC: UBGXF - news) . buyout funds Apollo and JC Flowers, the sources said.

Blackstone (NYSE: BX - news) has also made it to the final stages but is bidding through one of its portfolio companies, Luxembourg-based insurer Lombard International Assurance, as an acquisition platform, the sources said, cautioning that no deal was certain.

Old Mutual and all the private equity bidders declined to comment.

Old Mutual Wealth Italy is part of the group's wider wealth management business and could fetch a valuation of about 100 million euros ($113 mln), one of the sources said.

If successful, the deal will be the first step in Old Mutual's dismantling and pave the way to a string of divestments.

Cinven, Apollo and JC Flowers have all recently closed insurance deals in Italy while Blackstone bought Lombard International Assurance from Friends Life (Other OTC: RSLLF - news) in 2014 and plans to use it as a buy-and-build platform.

Old Mutual said in March it would split into four businesses, namely a South African bank, an emerging markets unit, a U.S. asset manager and a wealth manager in Britain.

BINDING BIDS

Italy represents a tiny portion of Old Mutual's wealth management activities as it accounts for less than 5 percent of its business and operates as a standalone entity.

Reuters reported on March 31 that the 8.7 billion pound ($12.8 bln) company was sounding out potential bidders for its Milan-based subsidiary after having been present in Italy since 1997.

Rothschild, which is advising Old Mutual, has asked the private equity bidders to submit binding offers by the end of July in a bid to wrap up the process by September, the sources said.

A separate process to sell the group's remaining wealth management business, which analysts said is worth between 3 billion and 4 billion pounds, is expected to kick off towards the end of the year, another source said.

This process, which has long been on the radar screen of heavyweight private equity funds, was initially expected to launch after the summer but it is being delayed because of difficulties in carving out a standalone IT (Other OTC: ITGL - news) platform, the source said.

As an alternative to an outright sale, Old Mutual could also test market appetite for a possible stock market listing.

Old Mutual Chief Executive Bruce Hemphill told analysts last week that the firm could opt for a primary listing of Old Mutual Wealth in London and a secondary listing in Johannesburg.

The Anglo-South African group holds an annual general meeting on June 28, followed by a further meeting on the firm's remuneration policy for its break-up plan.

($1 = 0.8843 euros) ($1 = 0.6816 pounds) (Additional reporting by Carolyn Cohn; Editing by Susan Fenton)