Old Mutual break-up won't affect Kenya unit - CEO

Financial services group, Old Mutual has been split into four units leaving the Kenyan subsidiary under Old Mutual Emerging Markets.

Friday March 11 2016

Old Mutual Kenya Group CEO, Peter Mwangi speaks during the announcement of a merger of UAP-Old Mutual Group business following the acquisition of a 60.7 per cent stake in UAP Holdings Limited by Old Mutual at the Stanley Hotel in Nairobi on July 2, 2015. UAP Holdings on Thursday warned that its annual revenues for the year 2015 are set to be lower than expected in the face of a “difficult business environment”. PHOTO | SALATON NJAU |

Old Mutual Kenya Group CEO, Peter Mwangi in Nairobi on July 2, 2015. PHOTO | SALATON NJAU | NATION MEDIA GROUP

ByOTIATO GUGUYU
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ByBRIAN NGUGI
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Financial services group Old Mutual has been split into four units, leaving the Kenyan subsidiary under Old Mutual Emerging Markets.

The UK-South Africa listed company has announced plans to separate into Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank Group and OM Asset Management.

The split will, however, be carried out in the next two years and consultants have already been dispatched to guide the process.

Old Mutual Kenya Group CEO Peter Mwangi said the Kenyan subsidiary will not witness any major changes in the foreseeable future as operations are set to continue as usual.

READ: Eyes on London as Old Mutual takes Barclays flavour

“We will continue to operate as usual since all subsidiaries under emerging markets will remain the same,” he said.

Mr Mwangi stated that the announcement will not affect the takeover of UAP insurance which began last year.

Old Mutual acquired the East and Central African financial services company after it acquired majority stake in UAP.

STRATEGIC REVIEW

It bought out three firms (Abraaj Group, AfricInvest and Swedfund.) with a combined shareholding of 37.3 per cent in UAP Holdings Limited late last year after announcing in January 2015 that it had acquired 23.3 per cent of the company.

The announcement follows a strategic review led by chief executive Bruce Hemphill, who joined the company last November from Standard Bank.

Mr Hemphill described the current structure as inefficient. He said regulatory changes in Europe and South Africa had made the group more complex to run.

"It's a costly structure with insufficient synergies to justify those costs," Mr Hemphill said.

"Our new strategy will allow each business to have simpler access to capital markets to fund its growth more easily and be valued more appropriately, with more straight forward regulatory arrangements," he added.

The company has also been hit by a steep fall in the value of the rand. Analysts estimate that more than half of the company's earnings are in the South African currency.

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