Planned Old Mutual operations review could affect local unit

Tuesday March 8 2016

Old Mutual Building along Kimathi Street in Nairobi. Old Mutual Kenya subsidiaries sunk deeper into losses as a depressed stock market eroded capital gains from equity investments while devaluation of value bonds reduced earnings from fixed income securities. File

Old Mutual Building along Kimathi Street in Nairobi. File 

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UK-based multinational Old Mutual Plc has said it is planning a strategic review of its operations in what could potentially affect the operations of its Kenyan unit. The London and Johannesburg-listed group, which has a presence here, said it was considering options for a strategic review but that no decision had yet been made.

The financial services giant was responding to a report by Sky News that the Anglo-South African financial services firm is plotting a break-up, which could trigger a takeover battle for its various operations.

Old Mutual Kenya (OMK), is part of the long-term savings and investment business of Old Mutual plc. Without citing sources‚ Sky News said the group was working on a plan to divide itself into stand alone companies comprising its stake in South African lender Nedbank‚ its UK-focused wealth unit‚ its emerging markets operation based in SA‚ and its institutional asset management business.

Sky News said two private equity firms, Cinven and Warburg Pincus‚ were already said to have tabled a multi-billion-pound joint cash offer for Old Mutual wealth.

Saying it had noted the press speculation‚ Old Mutual plc said in a brief statement that when its new chief executive Bruce Hemphill joined last November 1, the group had announced that it would be conducting a strategic review.

“We can confirm that all options for the strategic review are being considered but no decision has yet been made. Old Mutual is due to announce its preliminary results for 2015 on March 11, 2016, and will provide an update on the strategic review at that time,” it said.

The firm’s subsidiary, Old Mutual Property, recently invested Sh6.4-billion ($6.4 million) in the holding company of Centum’s Two Rivers Mall, giving it an equivalent of 50 per cent stake in the company.

The UK-based multinational Old Mutual took a 10 per cent stake in Two Rivers Lifestyle Centre Ltd (TRLC) in exchange for cash and has also made a convertible loan to the company that could later be turned into an extra 40 per cent equity ownership.

“The transaction will see Old Mutual ultimately hold a 50 per cent stake in TRLC,” Centum said in a statement.

The Old Mutual Group is an international long-term savings, protection and investment business.

Founded in South Africa in 1845, the group operates primarily under the Old Mutual and Skandia brands in Africa, Europe, the Americas and Asia.