Old Mutual platform upgrade delayed two years as costs balloon to £450m

Old Mutual Wealth 2014

Old Mutual’s upgrade of its platform will take an extra two years than originally planned, costing an additional £250m and bringing the total bill up to £450m.

The group’s full year results, published today, reveal the expected delivery date for replatforming the Wealth division has been changed from the end of 2016 to the second half of 2018.

In addition, the heritage book will wait until 2019 before being replatformed.

To date Old Mutual has spent £177m – including £97m in 2015 – on the upgrade programme. The firm predicts its total spent over six years will now be between £425m and £450m.

Management consultants Accenture and KPMG have been hired to work on the project.

Old Mutual says: “The market and regulatory environment has changed significantly in the last few years and we want to ensure we implement the programme with minimum impact for advisers, customers and our business. Given our focus on the quality of the delivery, we will need to conduct extensive testing and utilise a phased deployment for our roll-out.”

Today’s results also confirmed the group’s planned carve-up of the business into four lines: Old Mutual Wealth, South African lender Nedbank, the South African Old Mutual Emerging Markets business and its US institutional asset management arm OM Asset Management.

The results say: “The managed separation of the group will be effected in a manner that maximises value to shareholders over time, Nedbank and OM Asset Management (US) are already publicly traded and the managed separation may involve equity market activity for Old Mutual Wealth and Old Mutual Emerging Markets as well.”

Private equity firms Cinven, the majority shareholder in Partnership, and Warburg Pincus are believed to have tabled a joint cash offer for Old Mutual Wealth.

It comes as Old Mutual Wealth made an adjusted operating pre-tax profit of £307m, up 25 per cent to the £227m profit posted in 2014.