Old Mutual’s decision to separate its underlying businesses from each other within the next two to three years is not expected to result in job losses in Namibia, but jobs are expected to be affected at the company’s headquarters in London. The four businesses are Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank and OM Asset Management.
“Yes, there will be an impact on jobs in London, the full extent of which is not yet known. For the business units, this is not a cost-cutting exercise but rather a way of boosting their growth prospects through unlocking trapped value,” explained Quinten Potgieter, Old Mutual Namibia’s acting marketing, transformation and customer strategy executive.
The managed separation plan stems from a three-month strategic review in which Old Mutual and its subsidiary Nedbank worked with regulators to explore about 30 different options. The strategic review concluded that separating the business units was the right way to go, and the group will separate out Johannesburg-based Old Mutual Emerging Markets, which holds its insurance and wealth businesses in South Africa and Africa, as well as its controlling stake in Nedbank, from listed Nedbank by 2018, listed US institutional asset manager Old Mutual Asset Management and the group’s unlisted UK wealth management business.
“We took the decision to separate the group into four independent businesses as we believe the current structure traps value. Following the separation, each of the four businesses will deliver improved performance against its peers, will be aligned to its natural shareholder bases and will have appropriate capital management policies. The removal of the group structure will reduce costs, reduce complexity and address the current lack of a clear investment proposition for investors,” said Potgieter. He added that the group will liaise with regulators in all of the geographies in which it operates to ensure compliance with relevant legislation.
“Following the separation of the four businesses, we expect an improved performance from each of them. The Namibian economy can be expected to benefit from the improved performance of Old Mutual Emerging Markets once it becomes an independent entity,” Potgieter said.
He continued that the group can take a number of different routes to effect the separation. “We are undertaking an exercise of speaking to all our stakeholders to consult with them. Each route to separation we explore will be analysed in the context of value, cost, acceptable risk and time. We will come back to the market towards the end of the year to provide an update on our plans. We aim to have the managed separation materially complete by the end of 2018,” he said.