Old Mutual gets green light for a return
IOL BUSINESS REPORT / 10 JANUARY 2018 - 23.55 / SANDILE MCHUNU
JOHANNESBURG - Old Mutual is a step closer to restructuring its business after it was given the green light yesterday by the Competition Commission, on condition that it allocate R500 million to a new ring-fenced Enterprise Supplier Development Fund.
Old Mutual Emerging Markets (Omem) said yesterday that the recommendation for approval by the Competition Commission to the Competition Tribunal for the newly incorporated Old Mutual Limited to acquire Old Mutual Plc - with the conditions agreed to between Omem and the Economic Development Department - was a significant step towards the listing of Old Mutual Limited as a standalone entity this year.
Image : Mike Hutchings/Reuters
Omem and the Economic Development Department have reached an agreement in relation to three critical public interest issues that Old Mutual Limited will address: black economic empowerment (BEE) ownership, employment and enterprise and supplier development.
It warned that, as a consequence of the corporate restructuring, it was possible that Old Mutual Limited’s BEE ownership score, reported as a JSE primary listed entity and measured in terms of the revised Financial Services Code, might move to slightly below the regulatory target of 25percent.
“To the extent that Old Mutual Limited’s BEE ownership is less than 25%, Old Mutual Emerging Markets has committed to Old Mutual Limited attaining at least 25% within three years of its primary listing on the JSE and then to that of the peer group 'best of class', within five years, starting from the date of listing. Old Mutual Limited will consider appropriate mechanisms to achieve its BEE ownership targets in due course,” it said.
Minister of Economic Development Ebrahim Patel welcomed the decision by Old Mutual to make South Africa the primary base for all of its emerging market activities.
He said that the move “back home” of the country’s premier financial institutions would help to inject investor confidence in the economy and was a well-timed signal that the country could grow the economy in the period ahead and unlock the country’s potential of job creation and economic inclusion.
Old Mutual Limited also said that there would be no involuntary job losses as a result of the corporate restructuring.
The restructuring of Old Mutual was first planned in 2015 through a strategic review conducted by Old Mutual chief executive Bruce Hemphill, in which he said that Old Mutual would separate its four principal businesses: Omem, Nedbank, Old Mutual Wealth and Old Mutual Asset Management.
Hemphill said that separating the businesses would unlock value currently trapped within the group structure.
Old Mutual has been listed on the London Stock Exchange and the JSE since 1999.
Peter Moyo, the chief executive-designate of Old Mutual Limited, said that the company was excited about the homecoming of Old Mutual back to Africa.
“Old Mutual Limited will be an independent and focused business, better able to serve their broad stakeholder group.
"The listing of Old Mutual Limited on the JSE signals our commitment to and vote of confidence in the South African financial markets, and in South Africa as an attractive investment destination,” Moyo said.
Omem has reported an adjusted operating profit before tax of R12.3 billion and had R1 trillion of funds under management for the year to end December 2016.
Old Mutual shares closed 0.37% lower on the JSE yesterday at R37.76.
LINK : https://www.iol.co.za/business-report/old-mutual-gets-green-light-for-a-return-12671084
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER