In the 173 years that Old Mutual has been part of Africa’s financial fabric, it has seen many changes. The latest took place on 26 June this year when Old Mutual Limited had its primary listing on the JSE, underpinning its trust in African financial markets.
The day was another milestone in Old Mutual’s history and marked the end of a three-year process to divide the group into four entities, each with its own identity and ambit. Moving away from an umbrella group structure will unlock shareholder value and, most importantly, create a business with a strong strategic focus on Africa.
I am very excited about this and the renewed energy in the company is palpable. It was encouraging and rewarding, too, to see the positivity and optimism among our stakeholders at our Anchoring In Africa roadshow leading up to the listing. I will never forget listening to our stakeholders in the Eastern Cape as they voiced their expectations and seeing how much they appreciate the fact that Old Mutual has returned home.
One of the questions I’ve been asked during the three years is ‘Why now?’ What makes this the right time or the best time to separate our four underlying businesses into four strong, independent businesses? It’s a good question, with a complex answer.
The truth is that there was no single indication that now is the right time. Looking at the group as it was, we could simply no longer justify its structure – we had a European company (Old Mutual Wealth, or OMW), an American company (Old Mutual Asset Management, or OMAM), an emerging markets business (Old Mutual Emerging Markets, or OMEM), and Nedbank. And while the emerging markets business and Nedbank had some synergies, there were no real benefits to gain by keeping the four businesses under the same umbrella. It made sense to allow each to determine its own strategy without being encumbered by a group structure.
One of the things I learnt during the managed separation process, is that people in general knew very little about OMEM. It was a big part of our operation, but did not get the airtime it deserved. Few people knew that OMEM, as a business, was more profitable than some of our competitors as a whole. For this reason, I am thrilled that the market will now get a closer look at OMEM – now Old Mutual Limited, the new company – and will be able to judge them on their own merits.
WHAT IT MEANS
How will the changes affect our different stakeholders? I am confident in saying that it’s all positive.
For our customers, nothing much will change. Their business affairs will continue to be managed by the same people who’ve managed them all along. They will, however, now enjoy a more focused approach. The company remains well capitalised and our investment case is strong and compelling. Our business is well positioned in the right markets to drive added value from our franchises to create the perfect springboard for launching Old Mutual as a leading pan-African financial services business.
For our shareholders, they will no longer hold shares in Old Mutual plc. For every three Old Mutual plc shares held, Old Mutual plc shareholders received one ordinary share in Quilter plc; and three ordinary shares in Old Mutual Limited. It is intended that there will be a subsequent distribution of Nedbank shares to Old Mutual Limited shareholders with 3 Nedbank shares being issued for every 100 Old Mutual Limited shares held.
The ‘new’ Old Mutual has a renewed commitment to growing our market share by making sure that our operation remains competitive and that we achieve the best outcomes for our customers. For the people who work at Old Mutual Corporate, and at Old Mutual Limited, this is great news. It means that we will improve our efficiencies and technologies while continuing to attract the best talent. All of this will benefit our customers – and our staff.
I look forward to seeing the company deliver sustainable profit growth and returns for our shareholders and driving long-term economic growth in Africa. It is the only way to change lives across our beautiful continent. Anyone who has an interest in Old Mutual has to be excited about this. I, for one, cannot wait!