Shares in Old Mutual have fallen by more than 4% after the firm announced plans to split up its four main businesses - Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank Group and OM Asset Management in the US, following a strategic review.
Shares in the FTSE 100 listed firm are down 4.6% this morning to trade at 176.50p by 10.45am.
The firm said the managed separation of the group will be handled with the view to maximise shareholder value over time. The breakup is expected to complete by 2018.
Nedbank and US-based OM Asset Management are already publicly traded, and the managed separation "may involve equity market activity" for Old Mutual Wealth and Old Mutual Emerging Markets as well, the firm said.
The group said each of the main businesses has benefited from significant investment and has "strong growth prospects in sizeable markets", but there are "limited tangible synergies" between the four.
Bruce Hemphill, group chief executive, commented: "The strategy we have announced today sets out a bold new course to unlock value currently trapped within the group structure.
"Our new strategy will allow each business to have simpler access to capital markets to fund its growth more easily and be valued more appropriately, with more straight forward regulatory arrangements.
"We are announcing today a strategy that will allow us to release the potential within the group for the benefit of all its stakeholders for many years to come."
We have solid foundations in place to support the next stage of our journey. Our aim is to be a changemaker, creating prosperity for today's generation and those of tomorrow.
'Exciting future'
Paul Feeney (pictured), chief executive of Old Mutual Wealth, added: "Old Mutual's announcement today is a great endorsement of our successful business strategy. We have a very exciting future ahead of us.
"Beating the objectives we set three years ago, our company has delivered outstanding results for 2015 despite being faced with some of the most difficult global stock markets I have ever seen.
"By outperforming many of our peers in the industry in 2015, we have kept the promises we made in 2012 to create a new force in wealth management.
"We have solid foundations in place to support the next stage of our journey. Our aim is to be a changemaker, creating prosperity for today's generation and those of tomorrow.
"Our vertically integrated business strategy is now delivering results for our customers and shareholders. It is this strategy which truly differentiates us from our industry peers."
Strong annual results
In its annual results today, the group as a whole reported an 86% increase in net client cash flow (NCCF) for the year, up to £6.9bn from £3.7bn in 2014. Old Mutual Global Investors (OMGI) saw this figure increase by 40% to £3.5bn.
Pre-tax profit for Old Mutual Wealth as a whole increased by 35% to £307m during the year, from £227m in 2014.
At OMGI, profits more than doubled from £33m to £71m, while funds under management in the UK asset management division increased by 18% to stand at £24.7bn.
The firm said it has seen strong flows through the UK platform, from Intrinsic advisers through the Old Mutual Cirilium portfolios range, as well as into popular funds such as the Old Mutual Global Equity Absolute Return and Richard Buxton's UK Alpha fund.
It noted WealthSelect also continued to attract good levels of net new investments over 2015, taking overall FUM in this area to £1.7bn.
Meanwhile, its UK platform had NCCF of £2.7bn for the year; up 35% on the previous 12 months. This was driven primarily by net pension sales, up 52%, following a boost from the introduction of pensions freedoms. Pre-tax profits for this part of the business rose by 74% over the year, from £19m to £33m.
Sales onto the platform via Intrinsic advisers now account for 25% of all platform NCCF for the year. Total platform net flows into OMGI were £1.1bn, up from £0.9bn in 2014.
Our vertically integrated business strategy is now delivering results for our customers and shareholders. It is this strategy which truly differentiates us from our industry peers.
Long-term investment
Meanwhile, the group reaffirmed its commitment to long-term investment in the UK platform market and an upgrade of its existing offering, adding it will need to conduct "extensive testing and utilise a phased deployment for our roll-out".
"As a result, the expected delivery date has moved from the end of 2016 to H2 2018 for the main part of the Wealth implementation and to 2019 for the Heritage book," according to the group.
Old Mutual Wealth said it has spent £177m to date on the project, with £97m in 2015. It now sees the programme spend to completion of an additional c.£250m. In total over the six-year period, it estimates the current plan will cost around £425m-£450m.
Old Mutual, which was founded in South Africa, has struggled with issues such as tough UK regulation, a weaker rand in South Africa and a complex business structure.
Old Mutual Wealth senior executive duo to exit
The news the company may be planning a breakup of its separate divisions as a result of its strategic review emerged earlier this week.
