By Dasha Afanasieva, Carolyn Cohn and Ben Martin
LONDON (Reuters) - Anglo-South African financial services firm Old Mutual
The Old Mutual Wealth flotation is one of several legs in the process of splitting parent Old Mutual into four parts.
Before the listing, Old Mutual Wealth plans to sell its single-strategy asset management division, Old Mutual Global Investors (OMGI), led by veteran investor Richard Buxton.
The IPO, which is taking place alongside a demerger of the unit in June 2018, would value the business at about 2.5 billion pounds ($3.35 billion), assuming the OMGI sale goes ahead, two of the sources told Reuters.
Old Mutual Wealth's pre-tax adjusted operating profit rose by 29 percent in the first half to 134 million pounds.
Analysts at KBW and a second source who declined to be named said the IPO would involve 10 percent of the company.
Old Mutual, whose businesses including banking, insurance and asset management, has said it is breaking itself up because regulatory change makes the company too complex to run in its current form.
In addition to the planned demerger and IPO of Old Mutual Wealth, the break-up involves selling U.S. firm Old Mutual Asset Management
The break-up, initiated last year by Chief Executive Bruce Hemphill within months of joining Old Mutual, will land him a maximum 1,000 percent bonus of his 900,000 pound 2016 salary if completed successfully. But, with many moving parts to the process, some analysts see considerable execution risk.
Australian bank Macquarie
OMGI CEO Buxton favoured the approach from TA Associates but Macquarie was seen as frontrunner by the wealth unit, they said.
Initial bids were due in by the end of September but the process has been slow and Old Mutual Wealth was unlikely to move to exclusive talks this year, one of the sources said.
Old Mutual Wealth could also choose to abandon the sale and keep OMGI, two sources said.
The U.S. banks mandated for the IPO declined to comment. Old Mutual Wealth, Macquarie, TA Associates and Richard Buxton also declined to comment.
On Thursday Old Mutual closed at 197.6 pence, 8.6 percent above the closing price on the day it announced its break-up.
(Writing by Carolyn Cohn; Editing by Edmund Blair)