Old Mutual sells Buxton UK funds business for $800m

LONDON: Old Mutual is selling part of its UK asset management business, run by veteran investor Richard Buxton, to private equity firm TA Associates for £600 million ($803 million), as it heads toward a break-up of the group.
The Anglo-South African financial services group said in a statement on Tuesday that Old Mutual Wealth had agreed the sale of its single-strategy asset management business — where each fund focuses on one type of asset rather than a mix.
The sale comes ahead of a listing of the rest of Old Mutual Wealth next year.
Old Mutual, which started as an insurance company in Cape Town in 1845, has said it is breaking itself up because regulatory change makes the company too complex to run in its current form.
In addition to a planned demerger and initial public offering of the rest of Old Mutual Wealth, the break-up involves the sale of US firm Old Mutual Asset Management, the listing of Old Mutual’s emerging markets unit and a reduction of its stake in South Africa’s Nedbank.
TA Associates is paying £570 million in cash for the Buxton unit on or before completion, with £30 million payable afterwards, between 2019 and 2021, Old Mutual said in a statement.
The unit had assets under management of £25.7 billion at Sept.
30, and TA Associates was in competition for the business with Australian bank Macquarie, sources told Reuters earlier this month.
“This is a good outcome for the single-strategy business which had been clearly agitating to extricate itself from the parent,” Shore Capital analyst Eamonn Flanagan said in a note, reiterating his buy rating on the stock.
Old Mutual’s shares were up 3.94 percent at 221.5 pence in early trading in London, to the top of Britain’s FTSE-100 index.
The majority of the single-strategy management team, including Buxton, will move with the business, Old Mutual said in a statement.
“The management team is delighted to be partnering with TA Associates to buy the single-strategy business,” Buxton said.
“This is a good outcome for our customers and our staff.”