Old Mutual Plc, Africa’s biggest insurer, said it plans to proceed with an initial public offering for its U.S. asset-management business this year.
“This offering will broaden U.S. asset management’s access to capital to pursue future growth initiatives across its business,” the London-based insurer said in a statement today. Old Mutual declined to comment on the timing of the IPO, saying it was subject to market conditions. The company’s shares rose the most in more than two years in London trading.
Old Mutual has been considering an IPO since the U.S. unit reported outflows in the wake of the 2008 global financial crisis. Chief Executive Officer Julian Roberts has said the IPO would only take place once the business was profitable and stable. Profit at the unit climbed 22 percent to 111 million pounds ($186 million) last year.
“We expect the market to respond favorably to the planned minority IPO of the U.S. asset management business which, with funds under management of about $257 billion, could be valued at over $3 billion,” Eamonn Flanagan, a Liverpool, England-based analyst at Shore Capital Group Ltd., said in a research note today.
Old Mutual closed up 5.9 percent to 197.10 pence in London trading, the most since December 2011. The insurer will pay a final dividend of 6 pence.
Old Mutual profit from continuing operations, which strips out the affect of asset sales in 2012, increased 7.2 percent to 980 million pounds last year, the company said. Adjusted earnings a share rose to 18.4 pence, in line with the 18.5 pence median estimate of nine analysts surveyed by Bloomberg. Net income fell about 40 percent to 705 million pounds.
“We are growing in South Africa, with more than 750,000 new Old Mutual and Nedbank customers,” Roberts said in the statement. “We have taken significant steps in our goal of becoming Africa’s financial-services champion, with new businesses in East and West Africa and nearly 600,000 new customers.”
The company is looking for more acquisitions in Ghana, Kenya and Nigeria this year, Roberts said.
Old Mutual bought Intrinsic Financial Services Ltd., a U.K. firm that will give it access to 3,000 financial advisers, Roberts said on a conference call from London today. The value of the deal wasn’t disclosed.
Less than a year after Old Mutual hired Schroders Plc’s Richard Buxton as head of U.K. equities, the insurer said the Alpha fund he manages recorded inflows of almost 1 billion pounds. Gross inflows at the company’s wealth unit climbed 24 percent to 14.4 billion pounds in 2013.
“We have set a pretax adjusted operating target for the wealth business of 300 million pounds in 2015 and we are on track,” Roberts said.
Other targets for Old Mutual include increasing customers to more than 9 million by 2015 and keeping return on equity at 20 percent to 25 percent, he said. The company wants to grow profit in the rest of Africa to 15 percent of South African earnings by 2015.