OMI posts sharp rise in Middle East client inflows

Added 11th August 2017

Old Mutual International, the offshore arm of Old Mutual Wealth, has seen striking growth in cash inflows from clients in the Middle East during the first half of 2017, according to interim results posted on Friday.

OMI posts sharp rise in Middle East client inflows

OMI saw net client cash flows (NCCF) double in the six months to 30 June over the same period of 2016, rising to £400m ($520m, €440m) from £200m. Within this category, NCCF in the Middle East had increased by 111% to £203m in the first half.

Peter Kenny, managing director of Old Mutual International, said the main reasons for the pick up in the Middle East were the growing collaboration with Quilter Cheviot, and OMI's expanding distribution through bank channels.

“We are seeing increasing demand from high net worth customers for quality tax, pension and estate planning wealth solutions.

"We have benefited from our close collaboration with Quilter Cheviot in the region and access to its full discretionary portfolio management service has further enhanced our high net worth proposition," he said.

"Our new bond solution for UK expats living and working in the Middle East and Africa is a great example of how Old Mutual International is working together with Quilter Cheviot.

"We’ve also seen strong growth through banking partners, allowing us to offer wealth management solutions through diverse distribution channels," Kenny said.

Kenny added: “We continue to support and deepen relationships with advisers as they look to transition their businesses and build value through strong, long term relationships with their clients.”

OMI has recently launched two new products in 2017. 

The Select Bond, a new type of offshore bond, and the Wealth Portfolio, a new service from OMI and Quilter Cheviot that targets UK expats in the region through a bond which is fully portable in the event the expat returns to the UK.

Assets rise

Funds under management for OMI were up 5% overall to £17.8bn compared with £16.9bn at the end of 2016 on a like-for-like basis after £2bn of FUM for the South Africa branches was removed.

The South African branches have been transferred to Old Mutual Emerging Markets, one of four standalone entities of the Old Mutual Group that are due to be spun off. 

OMI’s total profit remained broadly flat at £25m; however, when the performance of its South African branches in the first half of 2016 is removed from the comparison, profit was up 14%.

 In the UK, OMI reported a 36% rise in NCCF for the first half of 2017 to £103m as its sales integration with the UK domestic business gained traction.

DFM growth

Quilter Cheviot, Old Mutual’s discretionary investment management firm, saw its own net client inflows rise by 50% in the six months to 30 June 2017 to hit £600bn.

Funds under management at Quilters were up 9% from the start of the year to £22.5bn, though this was mainly due to the acquisition of Attivo Investment Management, which completed on 29 March 2017. 

Quilter Cheviot’s profit was also flat at £24m, as lower commission income limited revenue growth.

Group effort

Strong net client cash flows were a feature of the interim result for the whole of Old Mutual Wealth in the first half, when they increased by 53% to £4.9bn compared with £3.2bn in the same period of 2016.

Gross sales for OMW rose 34% to £14.1bn over the period.

For the first half, OMW reported an adjusted operating profit of £134m, a rise of 29% over the first half of 2016. 

New listings

Old Mutual has also confirmed that OMW will be listed next year on the London and Johannesburg stock exchanges.

The listing will be done in conjuction with the float of a new holding company, Old Mutual Limited (OML), which will cover Old Mutual's emerging markets division, its majority stake in South Africa's Nedbank and Old Mutual plc.

Analysts have estimated that Old Mutual Wealth has a market valuation of at least £3.0bn.

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Richard Hubbard

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Richard Hubbard is the group editor at Last Word. He is responsible for the editorial content of International Adviser, Portfolio Adviser, Expert Investor and Fund Selector Asia. Richard previously worked for Thomson Reuters and has covered the financial services industry and investment themes from its offices in London, Singapore, Hong Kong and New York. Richard started his career at the Australian Financial Review in Sydney.

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