SHARES in insurer and pensions group Old Mutual soared more than 10 per cent yesterday after it said it would raise SEK 22.5bn (£2.08bn) by offloading its Nordic businesses.
The London-listed group will sell the long-term savings and banking operations in Sweden, Denmark and Norway to Skandia Liv, its mutual unit owned by policyholders.
Old Mutual, which runs banking, insurance and asset management operations in 33 countries, has been under pressure to cut its debt pile after concerns its sprawling range of assets had depressed market value.
The deal cheered investors with shares closing up 11.44 per cent at 123.7p. Analysts at Goldman Sachs said: “This sale price is significantly in excess of our sum of the parts component for these businesses of £1.4bn.”
Old Mutual will now quicken the reduction in debt and is set to return cash to shareholders.
The complex deal comes down to combining Skandia Liv and Nordic, and remutualising the latter, said one person familiar with the matter.
Skandia Liv, founded 138 years ago, is Sweden’s largest life insurer. It will pay for the acquisition by selling some of its portfolio assets, mainly shares, chairman Gunnar Palme said.
Old Mutual sold its American life insurance business to hedge fund Harbinger this year and remains keen on selling its stake in South African lender Nedbank. Skandia UK is not affected by the deal.
ADVISERS: DEUTSCHE BANK
A DEAL as large and as complex as Old Mutual’s disposal of its Nordic businesses, which will see Skandia Liv pay for the acquisition by selling some of its portfolio assets, required a hefty team of advisers.
Peter Brown and Henrietta Baldock at Bank of America Merrill Lynch and James Agnew and Andrew Thompson from Deutsche Bank were corporate brokers to Old Mutual. The joint financial advisers were Andrew Sibbald, Ollie Clayton and Tony D’Souza from Evercore, a boutique advisory firm which has defied the critics who called it a “retirement home”, and Jakob Lindquist, Chris Kaladeen and Paul Baker at Morgan Stanley.
One of the best-known names to work on the deal was Agnew, a veteran banker with almost 20 years experience in corporate broking, who currently sits on the Takeover Panel and has had a prolific City career.
He also advised News Corp on its approach – later abandoned as the phone hacking scandal deepened – for the shares it does not already own in British satellite broadcaster BSkyB.
Kaladeen led the Morgan Stanley team on the deal. He was among a group of 133 managing directors appointed three years ago.