Old Mutual break-up on track for 2018 despite UK tech issues: CEO

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Old Mutual is on track to complete its break-up into four parts by the end of 2018, although improvements to IT systems at its UK asset management unit could take longer and cost more than expected, the chief executive said on Thursday.

The Anglo-South African financial services group is splitting itself up into its four main businesses because it says regulatory change has made it too complex to run the disparate group in its current form.

The firm said in August 2016 that a new platform for Old Mutual Wealth would cost 450 million pounds ($547.07 million) and be completed around the end of 2018.

“This is a very, very complex new build of a replacement platform … these projects tend to take longer and cost more than one would like”, chief executive Bruce Hemphill told Reuters by phone, though he added he didn’t think any changes to costs or timing would delay the group’s separation plans.

The firm said in a trading statement it planned to give more detail on the platform upgrade within the next two months.

Old Mutual plans to dual-list its UK asset management and African emerging markets businesses in London and Johannesburg and cut stakes in its U.S. asset management division and South Africa’s Nedbank. It has already started selling its stake in OM Asset Management (OMAM) down to 51 percent.

It has also said it is open to offers for its businesses, amid speculation of private equity bidders for some of them.

Hemphill said the break-up plans had “sparked a lot of interest,” without giving more detail.

Eamonn Flanagan, analyst at Shore Capital, said “the news that the UK platform transformation is expected to take longer and cost more is not going to be taken well”, but reiterated his buy rating on the stock after stronger than expected results.

Old Mutual posted a slightly above-forecast 2016 adjusted operating profit of 1.67 billion pounds, up 1 percent from a year earlier, helped by a focus on costs in a volatile political and economic environment.

The profit compares with 1.61 billion pounds in a company-supplied consensus forecast.

The group also said it appointed former South African Finance Minister Trevor Manuel as chairman of its emerging markets business, following a review which means a greater focus on sub-Saharan Africa.

Old Mutual shares were trading at 225.8 pence at 0850 GMT, down 1.4 percent and compared with an 0.5 percent drop in the FTSE 100 index.

Old Mutual said it would pay a final dividend of 3.39 pence and total dividend of 6.06 pence, down 32 percent from a year ago.

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