• Group executives said to favor other options including sale
  • Firm said to have contacted possible buyers for U.K. unit

Old Mutual Plc, Africa’s largest insurer, may drop plans for a listing of its U.K. wealth management unit because of escalating costs from an upgrade of its investment platform, according to a person familiar with the matter.

While managers at Old Mutual Wealth want to proceed with an initial public offering, executives at the group level are leaning towards options including a sale of the unit, the person said, asking not to be identified because the discussions are private. An external spokesman for Old Mutual declined to comment.

Upgrades to the wealth unit’s investment platform started in 2013 and London-based Old Mutual has pushed out the completion date to 2019, from the end of 2016. Delays have added to the cost, which is now expected to be as much as 450 million pounds ($584 million) compared with an estimated 160 million pounds in 2013, company filings show.

Old Mutual has already contacted potential buyers for the U.K. unit, the third-largest wealth manager in Britain based on assets under administration, a person familiar with the matter said. The company may find it difficult to do any deal currently because of the differing views between the group executives and the U.K. team on the unit’s future, the person said, declining to be identified as the matter is private.

Chief Executive Officer Bruce Hemphill has said that a wider breakup plan, which includes demerging the wealth unit, asset management, emerging-markets and Johannesburg-based lender Nedbank Group Ltd., will be mostly finished by the end of 2018. The CEO stands to earn a bonus of 9 million pounds if the break-up goes according to plan.

The firm has received interest in various assets within the group, including the U.K. wealth business, and will consider any offer that makes sense, Hemphill said in June. The initial plans were subject to change, the company said in a June 28 filing.

Old Mutual is planning to update investors on its plan at a capital markets day on Oct. 11. Paul Feeney, the chief executive officer of the wealth management unit, is due to speak at the event.

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