Old Mutual has pumped £200 million into its wealth arm in a bid to prepare it for its planned spin off as a separate business.
In a stock market update, the firm said that the ‘managed separation’ will occur next year, shortly after its full-year results are announced.
As part of the cost savings announced by the move, the firm said it has already reduced its London headcount by 50% with the goal of shutting its City HQ next year. The £200 million is being put into the company as a 'liquidity buffer' ahead of it becoming an independent business.
In a trading update, the firm reported that net client cash flow increased by 53% to £4.9 billion in the six months to the end of June, while funds under management rose by 10% to £127.3 billion.
Old Mutual said 'integrated flows' across the business rose from £0.7 billion to £2.2 billion year-on-year. The company highlighted Old Mutual Global Investors' multi-asset proposition as a standout performer, taking in net flows of£1.6 billion.
Pre-tax adjusted operating profit was up 29% to £134 million, with the firm’s pre-tax operating margin rising from 28% to 30%.
Old Mutual Wealth CEO Paul Feeney (pictured) said: ‘Despite continued questions over the strength and resilience of the UK economy, including rising inflationary pressures, we saw continued growth in net client cash flows which were up 53% to £4.9 billion (H1 2016: £3.2 billion) with a particularly noteworthy performance in the UK platform and by both the multi-asset and single-strategy businesses in Old Mutual Global Investors.
‘2017 continues to be a year of transition for Old Mutual Wealth as we move towards our separation from Old Mutual plc, and we are excited about the opportunities ahead.’