Business as usual at Nedbank after Old Mutual announces its intention to reduce its current shareholding in Nedbank to a strategic minority over time, with the balance of Nedbank shares to be widely held11 March 2016
Old Mutual plc Chief Executive, Bruce Hemphill announced this morning that Old Mutual, a 54% shareholder in Nedbank Group, would be reducing their controlling stake in Nedbank Group to a strategic minority shareholding. This will take time to complete.
This announcement follows the announcement of the outcome of Old Mutual’s strategic review that was released earlier today, in which Old Mutual outlined its new strategy of a managed separation of the underlying businesses in the Old Mutual Group to unlock value. For Old Mutual, this should improve efficiency of funding, reduce Old Mutual plc head office costs, remove complexity including increasing regulatory constraints and unlock and create value for Old Mutual shareholders.
Old Mutual announced that the Group’s four underlying businesses, Old Mutual Emerging Markets (“OMEM”), Old Mutual Wealth, Old Mutual Asset Management and Nedbank would be managed as independent businesses. The announcement highlighted that these businesses have excellent competitive positions and each have strong growth prospects in their respective markets.
The exact mechanism to achieve any reduction in Old Mutual’s shareholding in Nedbank Group has yet to be finally determined. Old Mutual currently envisages reducing its shareholding in Nedbank Group primarily by way of a distribution of Nedbank shares to the shareholders of Old Mutual in an orderly manner and at an appropriate time in the managed separation and it does not intend to sell any part of its shareholding in Nedbank Group to a new strategic investor. It is currently intended that apart from the strategic minority shareholding in Nedbank Group to be held by Old Mutual, the remainder of the Nedbank Group shareholder base will be widely held by the time the managed separation process has been completed.
Mike Brown, Nedbank Group Chief Executive said: “The Nedbank Board and I have been proactively engaging Bruce and the Old Mutual Board about their new strategy and its impact on Nedbank and we have expressed our support for this outcome and look forward to working together to help implement the Old Mutual managed separation in a collaborative way that benefits all stakeholders.
The process is expected to be completed by end 2018. During this period, the boards of directors and management of Nedbank and Old Mutual will continue to work closely with each other to determine the most effective and appropriate method and timing for the reduction in Old Mutual’s shareholding, as well as determining the level of the strategic minority shareholding that Old Mutual will hold in Nedbank on an on-going basis. This will be done in such a way that safeguards all Nedbank stakeholders and the stability of the South African financial services sector.
This announcement provides clarity on the ongoing commercial relationship between Old Mutual South Africa and Nedbank and should end any speculation as to the ownership of Nedbank.
Old Mutual’s decision to separate its four businesses will have no impact on the strategy, day to day management or operations of Nedbank. Nedbank Group is already governed, managed and operated as an independent business which is separately listed on the Johannesburg Stock Exchange. This will not change for shareholders, clients and staff.
Financially Nedbank is a solid business with a track record of generating strong shareholder returns. Nedbank does not anticipate any operational or strategic changes as a result of the reduction in Old Mutual’s shareholding”, said Brown.
On 2 March 2016, Nedbank Group announced its audited results for the year ended 31 December 2015 (details available on Nedbank Group’s website at nedbankgroup.co.za) and highlights included growth of 9,6% in headline earnings to R10,8 billion, a 9,0% increase in net asset value per share, a 11,3% common equity tier 1 ratio and a 7,7% increase in the full year dividend per share.
“Nedbank will continue to offer our retail and wholesale clients’ world class service, products and advice in South Africa and in the Rest of Africa. It’s business as usual at Nedbank”.
Commenting on the relationship with Old Mutual Emerging Markets, Brown said “Nedbank’s mutually beneficial relationship with OMEM will also continue and be underpinned by Old Mutual’s strategic minority shareholding in Nedbank. Both Nedbank and OMEM intend that our collaborative, commercial relationship will continue to pursue savings and strategic benefits and we remain committed to the previously announced 2017 pre-tax synergies target of R1 billion in both
South Africa and the Rest of Africa”.
In conclusion Brown said: “This clarification of Old Mutual’ s strategy is a
positive step for Nedbank and all the businesses within the Old Mutual Group”.
The Nedbank Board and I would like to express our sincere appreciation to the Old Mutual Group for the longstanding relationship and on-going support of Nedbank and I look forward to continuing to work with both Bruce Hemphill and Ralph Mupita”.
The Nedbank Group cautionary announcement dated 7 March 2016 is hereby withdrawn. Nedbank Group shareholders will be kept appropriately informed of further developments.
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