Old Mutual has been listed on the London Stock Exchange since 1999, yet the majority of its shareholders are South African institutions, emerging market equity funds and both local and global index tracker funds – by virtue of the fact that it is a constituent of the FTSE 100 index.
This makes sense considering that its South African roots run back into the 19th century and most investors still view the company as an emerging-market play. However, as the group breaks itself apart in the ‘big unbundle’, new shareholders may start to line up.
In particular it is hoped that next week’s listing of Quilter (previously Old Mutual Wealth Management) on the London and Johannesburg stock exchanges will attract the attention of the UK establishment.
There are many reasons why it will. For a start the brand Quilter is well established there, with a heritage that extends back to the 17th century and a reputation for high-end wealth management. In addition, almost all of the company’s clients are based in the UK, drawn from the ‘mass affluent’ market and above.
It is financially independent of the broader Old Mutual group, with more than £110 billion in assets under management and cash flows of £7.6 billion, as of March 2018.
“Our business contributes 25% to 30% of group revenue and earnings, but investors have not been able to access us directly,” says Paul Feeney, CEO of Quilter. “That is changing and investors can now decide. For Quilter it gives us the opportunity to diversify our shareholder base.”
South African investors will benefit from returns in sterling, in a market that is growing strongly, he says.
Old Mutual has set a price range of 125p-155p per share for up to 9.6% of ordinary shares of Quilter ahead of the listing. This will give the company a market cap of about £2.6 billion. The rest of the shares will be distributed to Old Mutual shareholders who will receive one Quilter share for every three Old Mutual plc shares held.
Feeney and corporate finance director Mark Satchel see the listing as a new beginning and believe the company is well placed for growth and to achieve its goal of becoming the UK’s leading wealth manager. “Of all the financial businesses in the UK, the wealth market is the most fragmented,” says Feeney. The top four or five banks own 90% of the market and the top four life insurers own 80% of the market. Yet the top players in the wealth market – Quilter, St James’s Place and Hargreaves Lansdown – own 10% of the market, he says.
As a ‘full service’ wealth manager, Quilter will offer financial advice, retirement and investment structures, and investment solutions.
Its financial planning business now known as Quilter Financial Planning (previously Intrinsic), has the broadest reach. It is supported by over 2 000 ‘restricted’ financial planners and over 4 000 independents. and is the second largest in the UK.
Feeney believes an increasingly complex investment environment is playing into their hands. “In the past your employer or the government looked after your retirement needs. But times [and regulations] have changed. Government has left the ring and taken the ropes with them.” This means that ordinary people are more in need of financial advice than ever.
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