Old Mutual Plc unit Old Mutual Wealth agreed to sell its single strategy asset management division, Old Mutual Global Investors (UK) Ltd., to the business' management team and funds managed by private equity firm TA Associates Management LP for a total consideration of approximately £600 million.
The amount comprises a cash consideration of £570 million payable on or before completion of the deal, with approximately £30 million anticipated to be payable afterward, primarily in 2019 to 2021, as surplus capital associated with the separation from Old Mutual Wealth. The deferred consideration is not subject to performance conditions, Old Mutual noted Dec. 19.
Following completion of the transaction, economic ownership of Old Mutual Global Investors will be transferred to the acquirer, effective Jan. 1, 2018.
Proceeds of the sale will be used by Old Mutual Wealth for general corporate purposes, following finalization of its planned IPO, which is slated to take place soon after publication of its results in February or March 2018.
The transaction is subject to regulatory approvals and conditions relating to the transfer of the multiasset business to be retained by Old Mutual Wealth. A number of operational and IT transitional service agreements covering the separation of the retained multiasset business from the single strategy business have also been agreed for a period of up to two years from the date of the completion of the sale.
The majority of the current management team of the single strategy business, including CEO Richard Buxton, will remain with the division.
The single strategy asset management division had £25.7 billion in funds under management as of Sept. 30 and net client cash flow of £3.5 billion for the first nine months of 2017. It booked pretax profit for the full-year 2016 of £60 million, of which £26 million was performance-fee related, as well as gross assets of £198 million.