Old Mutual Slimming Down Its Conglomerate Further with Stake Distribution
Nedbank Group Ltd (NED SJ) will have a 30% increase to its free float resulting from Old Mutual Ltd's (OMU SJ, formerly Old Mutual Plc, OML LN) distribution of its 32% stake on October 15, 2018. NED is expected to have some index selling pressure by UK funds with mandates to avoid South African bank stocks, while OMU will benefit from the return of a former executive with an excellent track record after 12 years leading other companies. OMU recently completed the distribution of its UK wealth management arm Quilter Plc (QLT LN) and subsequent primary relisting in Johannesburg on June 25, 2018.Market Reaction...
Since the Spinoff of QLT and its listing on the LSE (June 25, 2018), its share price return is -11.8%, underperforming the STOXX Europe 600 Index return of +0.7%. On the other hand, after the relisting of OMU on the JSE (June 26, 2018), its share price has increased by +7.6%, outperforming the Top 40 Index return of -0.6%.
The Edge View (OMU)...
Now relisted in South-Africa and focused on emerging markets, OMU is led by Peter Moyo (CEO), who is known for his business acumen, financial expertise and strengths in building client relationships. His tenures at Ernst & Young (1991-97), OML (the former Old Mutual Plc, 97-2005), Alexander Forbes (05-07), Vodacom (09-17) and OMU (17 to date) demonstrate his success stories. Starting his career as an auditor at E&Y in 1991, he became a partner within 3 years of joining the company and was responsible for overhauling the company’s structure and direction. In 1997, he joined OML when it was on the brink of demutualisation, and successfully refocused the company on delivering real client solutions and building strong client relationships. Leading Alexander Forbes, he recovered the company from one of the biggest corporate scandals of that time, bringing it back to profitability. As Chairman of Vodacom, he repeated his excellence in building strong client relationships and establishing good corporate governance practices. His current position at OMU has seen the restructuring of the reporting structure to increase client efficiency and accountability.
OMU’s compensation structure aligns each of the important financial metrics and share performance to management compensation, thereby ensuring company growth and value creation. Total net purchases of 2.9m shares (worth £7.7m) have been made by insiders over the last 3 months, which include a net purchase of 3m shares (worth £6.9m) by Alan Gillespie, who is a seasoned professional with ~28 years of industry experience.
The Edge View (NED)...
After the unbundling of OMU’s 32% stake, one of the four largest banking groups NED will increase in free float from the current 15 years with the company.
Nedbank is a bank holding company, engaged in providing a range of banking and financial services. Co.'s business operations include: Nedbank Capital, which provides investment banking solutions; Nedbank Corporate, which provides lending, deposit-taking, transactional banking and commercial property finance; Nedbank Business Banking, which provides Commercial banking solutions for small-to medium-sized businesses; Nedbank Retail, which provides financial solutions for individuals, startups and small businesses; and Nedbank Wealth, which offers wealth management, asset management and insurance solutions. As of Dec 31 2014, Co. had total assets of R809,313,000,000.
Old Mutual is an international investment, savings, insurance, and banking group. Co. three businesses are Old Mutual Emerging Markets, which distributes products and services to customers through a multi-channel distribution network spanning tied and independent advisers, branches, bancassurance, direct and digital channels, and worksites; Nedbank, which operates an asset management model as part of an integrated wealth management business; and Old Mutual Wealth, which providing advice-led investment solutions and investment platforms to customers, principally in the affluent market segment.
The Edge Group - Global Fundamental Catalyst Investing. The Edge provides investors with access to hidden corporate value from Global Special Situations using a pioneering approach to investments. Founded in 2005 by fund management and investment banking professionals to provide high quality, private equity-level research on Global Corporate Divestitures for the benefit of fundamental event-driven, growth and value-oriented investors in this difficult to track, but proven investment space.
The Edge will look to screen and analyze include Spinoffs; Reverse Morris Trusts; Squeeze Outs; Privatizations; Demutualization; Deep Discounted; Rights Issues; Rights Offering; Restructuring; Insider Purchases / Buying Change of Management / CEO Change; Deteriorating fundamentals; Post-Bankruptcy; Reorganization; Tender Offer; M&A Deals; Secondary Offering; Share Swap; Thrift Conversions; Share Buybacks; Activist; Mergers. All analyzed from a fundamental point of view.
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