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 The 585 million pound ($941 million) purchase brings Old Mutual
Wealth's assets under management to 92 billion pounds ($148
billion), a rise of more than 20 percent.
The purchase will increase Old Mutual's exposure to the lucrative
wealth management market, which is forecast to grow by between 6 and
8 percent a year. Britain's affluent population represents around 55
percent, or 1.7 trillion pounds, of the country's wealth market, the
company said.
The deal would enable Old Mutual to offer investment management
services to clients with more than 1 million pounds to invest, Old
Mutual CEO Julian Roberts told Reuters, adding to existing
"affluent" customers, who have at least 50,000 pounds.
"What Quilter does is to take us into the high net worth (clients)",
Roberts said. "We are not at the mass market level."
Old Mutual paid for the company with the proceeds of the sale of
some European businesses and the U.S. initial public offering of OM
Asset Management, which closed this week.
The deal price for Quilter Cheviot includes 42 million pounds of
deferred equity, contingent on the performance of the business, the
company said.
Old Mutual said it aimed to achieve annual cost savings of 15
million pounds by 2017.
Bridgepoint achieved an internal rate of return of 55 percent from
the sale of Quilter Cheviot, a source familiar with the deal said.
Analysts said the deal price, representing 3.6 percent of Quilter
Cheviot's assets under management, compared well with similar
transactions such as U.S.-owned Franklin Templeton Global Investors'
purchase of British firm Rensburg Fund Management in 2011, which
came in at more than 5 percent of AUM.
"This is a smart, well-priced deal for Old Mutual," said Eamonn
Flanagan, analyst at Shore Capital, in a client note, reiterating
his hold recommendation on the stock.
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Flanagan added Old Mutual "is starting to look very attractive once
the current volatility in investment and forex markets settles
down".
The company's shares rose 1.2 percent to 171.6 pence by 1040 GMT.
Old Mutual said the deal likely represented an end to its
acquisition activity in Britain.
But Roberts reiterated that the firm has expansion plans in
sub-Saharan Africa, where it has so far spent 700 million rand ($63
million) of a 5 billion rand investment program.
"We want to build our business in Nigeria, Kenya and Ghana, we want
to be a major player in those markets, both through organic and
inorganic growth," he said.
(1 US dollar = 0.6214 British pound)
(1 US dollar = 11.0699 South African rand)
(Editing by Elaine Hardcastle)
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