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Old Mutual is a mixture of UK, South African and US insurance and banking businesses

LONDON. – Old Mutual has had approaches from possible buyers of Old Mutual Wealth, its UK operation which analysts value at £3 billion to £4 billion, in the latest example of consolidation in the UK life insurance and wealth management industries.Last month Deutsche Bank agreed to sell Abbey Life to Phoenix Group for €1,1 billion, while Aegon and Axa have also sold UK businesses this year.

Old Mutual Wealth sells a variety of wealth and asset management products in the UK and Italy. It manages £119 billion for clients and last year made profits of £307 million. The approaches come as Old Mutual chief executive Bruce Hemphill pushes ahead with plans for a complete break-up of the group.

The company as it stands is a mixture of UK-based Old Mutual Wealth, a South African insurance business, and stakes in OMAM, a US asset manager, and Nedbank, a South African bank.

However, the combination has struggled to attract investors and the break-up is designed to create a series of more specialist businesses that will appeal to different types of shareholders.

While exact details of the break-up plan are subject to change, the overall shape is becoming increasingly clear. In the first stage, the 66 percent stake in US-based OMAM (worth about $1,1 billion) will be sold down, while UK based Old Mutual Wealth will either be floated in London or sold.

The group will be left with Old Mutual Emerging Markets, the South African insurance business, and a 54 percent stake in Nedbank. Its primary listing will be moved to Johannesburg and then most of the stake in Nedbank will be distributed to shareholders.

Old Mutual Emerging Markets is likely to keep a minority stake in Nedbank to provide a basis for co-operation between the two businesses.

The group said that the split, which will need shareholder approval, will be “materially complete” by the end of 2018.

Old Mutual was holding an investor day in London yesterday to explain the merits of each of its businesses to investors.

Ahead of that it gave an update on the costs of the split. Winding down the group’s London head office will cost £50 million to £65 million, while news costs relating to the listing of the UK and South African businesses are likely to reach £5 million to £10 million per year.

It also provided more detail on a long running IT project at Old Mutual Wealth. The cost has already increased from £160 million to between £425 million and £450 million. Yesterday there was no change to the overall cost but Old Mutual said that the price would no longer include migrating old business on to the new system.

Greig Paterson, analyst at Keefe, Bruyette & Woods, said that adding the older business to the new system would cost another £70 milion. – FT.