Old Mutual Announces Further Phase in its U.S. Strategy

Formation of Old Mutual Asset Managers (US)


LONDON, Jan. 8, 2001 (PRIMEZONE) -- Recently, the company announced the acquisition of additional revenue streams from Pilgrim Baxter, its major U.S. mutual funds franchise and retail distribution platform. Today's announcement relates to the formation, subject to regulatory approval, of an aligned group of affiliates to be called Old Mutual Asset Managers (US) ("OMAM(US)").

The aligned affiliates, representing total assets under management of $70 billion as at Nov. 30, 2000 and aggregate earnings before interest, taxes, depreciation and amortization of $81 million (run-rate as at Nov. 30, 2000), began operating as part of the OMAM(US) division as from Jan. 1, 2001. The combined revenue is $206 million (run-rate as at Nov. 30, 2000).

The formation of OMAM(US) creates a substantial, multi-style, multi-product asset management business in the U.S. It comprises the following six firms: Analytic Investors; Barrow, Hanley, Mewhinney & Strauss, Inc.; Clay Finlay Inc.; Dwight Asset Management Company; NWQ Investment Management Company; and Provident Investment Counsel.

The affiliates that have agreed to become part of OMAM(US) cover a broad spectrum of complementary, non-overlapping asset classes and investment styles, and collectively represent a wide range of investment capabilities. In choosing to align themselves with OMAM(US), the firms have agreed to modify their economic relationship with Old Mutual from a revenue-sharing to a profit-sharing basis. Over time, a number of other UAM affiliates may also join OMAM(US).

Each affiliate that has agreed to join OMAM(US) will retain its own identity, brand, investment philosophy and investment process, as well as responsibility for its client relationships. The firms will seek opportunities to work together co-operatively for the benefit of their clients and staff. They will also provide comprehensive coverage of U.S. asset markets and broad-based global product offerings to existing Old Mutual Group clients in Africa and Europe. OMAM(US) will work closely with all of Old Mutual's international asset management businesses, in particular with OMAM(UK) and OMAM(South Africa) and with Pilgrim Baxter.

Kevin Carter of Old Mutual will be Chief Executive Officer of OMAM(US). Carter will head a small team of high level executives, based in Boston and London, which will be responsible for executing strategy for OMAM(US). The team will also act as business consultants to the affiliates, helping them to grow their businesses, both individually and collectively.

Brian Malone (as Finance Director) and Brian Baskir of Old Mutual will join Kevin Carter on the board of OMAM(US), which will also include Richard Robie and George McClelland from UAM. Representative CEOs from the OMAM(US) aligned affiliates will also serve on that board. Eric Anstee, Chief Executive Financial Services, of Old Mutual plc, will be Chairman.

Kevin Carter commented: "With the creation of OMAM(US), we are able to offer a range of exceptional international investment capabilities both in the U.S. and to our customer base in Europe and southern Africa, and grow these substantially over time. Significant new revenue synergies are obtainable through active cooperation between the affiliates within OMAM(US). The affiliates are world-class in terms of their investment processes and teams of investment professionals, and have an exciting and diverse range of products, with outstanding performance track records."

Other UAM affiliates, apart from Pilgrim Baxter, will remain with UAM's current management, led by Jim Orr, Chief Executive Officer. In addition to Jim Orr, the management team at UAM includes Frank Kettle, Joe Ramrath, Kevin O'Brien and Stuart Nagode, all of whom have entered into new three-year employment agreements with UAM. Old Mutual expects to continue to hold a number of affiliates on a completely stand-alone basis. It also expects that some UAM affiliates may join OMAM(US) over time. All discussions with these affiliates about their future strategy will take place collaboratively, with the objective of aligning the interests of each firm's clients, their investment professionals and Old Mutual as the shareholder. Old Mutual has stressed that there will be no mass sale or forced consolidation of firms.

The acquisition and development of UAM is consistent with Old Mutual's strategic goal of building a world-class global asset management business.

Eric Anstee, Chief Executive, Financial Services, said: "We have now gained a strong foothold in the critical U.S. market on a basis which we are confident will significantly enhance shareholder value over the years ahead. The acquisition of UAM has provided us with a wide range of exceptional asset management operations serving a broad community of investors. The creation of OMAM(US), combined with our UK and South African operations, gives us a significant international platform in asset management."


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