FTSE-100 Giant Old Mutual Plots £9bn Break-Up

The FTSE-100 financial services group Old Mutual (Other OTC: ODMTY - news) is plotting an audacious £9bn break-up which could spark a takeover battle for some of the City's most prominent wealth management operations.

Sky News can reveal that the Anglo-South African giant is working on a plan to split itself into standalone companies comprising its stake in Nedbank, one of South Africa's biggest lenders; its wealth unit, which is focused on the UK; its emerging markets operation based in South Africa; and its institutional asset management business, which includes its remaining stake in the US-listed division.

Two buyout firms - Cinven and Warburg Pincus - are already said to have tabled a multibillion pound joint cash offer for Old Mutual Wealth, which includes names such as Quilter Cheviot and Old Mutual Global Investors, one of the most powerful investors in the UK stock market.

Details of the break-up plan could be outlined to the City as soon as next Friday, when Old Mutual is due to announce its annual results.

Insiders cautioned, however, that the plan has yet to be finalised and is likely to take many months to complete.

If they come to fruition, the proposals would carve up one of the best-known names in London's blue-chip share index and divide the ownership of businesses which manage roughly £320bn of assets.

Old Mutual, which recently agreed a deal to sponsor some of England's rugby union international matches, was established in Cape Town in 1845, but has endured speculation for many years about the logic of its corporate structure.

In 2014, it listed its US-based asset management arm, OM Asset Management (NYSE: OMAM - news) , which counts a string of boutique fund managers among its affiliates.

It (Other OTC: ITGL - news) also came close to selling Nedbank to HSBC in 2010 but the deal was called off at the 11th hour.

Bruce Hemphill, Old Mutual's group chief executive, is understood to have instructed advisers to begin work on the break-up shortly after taking over in November.

Old Mutual has a new management team in the form of Mr Hemphill and Ingrid Johnson, the chief financial officer.

Julian Roberts and Philip Broadley, their respective predecessors, were regarded in the City as having done a valuable job repairing many of its failing businesses after the financial crisis.

However, the company has continued to face the headwinds of a weak rand and tougher regulation as a consequence of its UK domicile.

Old Mutual has more than 17.5 million customers and employs more than 60,000 people globally.

At Friday's closing share price of 179.7p, the company had a market value of £8.8bn.

It was unclear this weekend what the Old Mutual board's intentions are towards each of the businesses as standalone entities, although a sale of the wealth arm looks inevitable.

Cinven and Warburg Pincus have previously worked together on the ownership of the Dutch cable group Ziggo (Other OTC: ZIGGF - news) , and their offer for the Old Mutual division is said to be worth several billion pounds.

Rothschild is understood to be advising the board of Old Mutual, while the company's brokers, Bank of America Merrill Lynch and Goldman Sachs (NYSE: GS-PB - news) , are also likely to have roles in the restructuring and sale of various assets.

Old Mutual, Cinven and Warburg Pincus all declined to comment.