Old Mutual Reaches Four-Year High on Sale: Johannesburg Mover
February 08, 2012, 11:29 AM ESTBy Stephen Gunnion
Feb. 8 (Bloomberg) -- Old Mutual Plc reached the highest level in almost four years after selling one of its asset management units in the U.S., clearing the way for an initial public offering of its U.S. asset-management business.
Shares in South Africa’s largest insurer, and the third- biggest in the U.K., rose 2.3 percent to 18.92 rand at the 5 p.m. close in Johannesburg, the highest since May 2008. Old Mutual has advanced 11 percent this year, the most in the five- member FTSE/JSE Africa Life Assurance Index.
Old Mutual sold Dwight Asset Management, which manages and advises about $42 billion in assets, to Goldman Sachs Group Inc. for an undisclosed amount. The move will help “free up capital to redeploy into our global distribution and asset management franchise,” Peter Bain, chief executive officer of Old Mutual Asset Management, said in a statement yesterday.
“Dwight is a big asset manager, but it has weak profit margins and it’s had bad net flows in the last few years,” Risto Ketola, an analyst at Standard Bank Group Ltd.’s SBG Securities, said in a phone interview from Johannesburg. “Maybe getting rid of Dwight makes it more feasible to IPO the remaining business or sell the remaining business. I think it’s more the message it sends out than the actual money involved.”
Old Mutual has delayed a planned initial public offering of its U.S. asset-management business and said last year the IPO probably won’t happen before the end of 2012.
On Feb. 3, it announced plans to return 1 billion pounds ($1.6 billion) to shareholders on the sale of its Nordic unit. The remaining 1.1 billion pounds will be used to reduce debt, it said.
--With assistance from Robert Brand in Cape Town. Editors: Peter Branton, Linda Shen
To contact the reporter on this story: Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net;
To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net
