Old Mutual Wealth is to become a separate entity under plans from the parent company to separate its business into four units.
The company has this morning announced plans to divide up Old Mutual Emerging Markets, Old Mutual Wealth, Nedbank and OM Asset Management.
A “managed separation is expected to be materially completed” by the end of 2018, the company told the Stock Exchange.
Bruce Hemphill, group chief executive, said: "The strategy we have announced today sets out a bold new course to unlock value currently trapped within the group structure.
"We have four strong businesses that can reach their full potential by freeing them from the costs and constraints of the group.”
The company also announced today that pre-tax adjusted profits rose 11% as profits after tax increased by 5% to £614m.
Mr Hemphill said: “As you can see from our results, these businesses are performing strongly, have excellent competitive positions in sizeable markets and the underlying growth potential to flourish independently.
"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.
"There is likely to be a range of external influences on future Group reported earnings including slower economic growth, exchange rates and equity market volatility and how we execute the managed separation. We nevertheless believe that our four strong businesses are well placed to continue to perform strongly in their domestic markets."
Patrick O'Sullivan, chairman, said: "After much careful thought, we have taken the important decision that the best interests of shareholders will be served by enabling these businesses to chart independent courses over the medium term.
“We owe a considerable debt to the loyal staff whose efforts have shaped the evolution of the group. I am sure that they, customers and shareholders alike will recognise the logic behind our decision and can look forward to the opportunity to create long term-shareholder value in the next phase of the evolution of Old Mutual."
Helal Miah, investment research analyst at The Share Centre, said: “The FTSE 100 group currently has a majority stake in Nedbank, but will be reducing this to a minority stake by distributing its share to holders of Old Mutual. The market should note that the company has no plans to find a new strategic investor for the business, although there have been reports this week of a takeover bid for its Wealth unit from private equity firms.”
