Old Mutual Asset Management sets terms for $352 million IPO

OM Asset Management, the asset management arm of London-based Old Mutual with $215 billion in AUM, announced terms for its IPO on Tuesday. The London, United Kingdom-based company plans to raise $352 million by offering 22 million shares (100% insider) at a price range of $15 to $17. At the midpoint of the proposed range, it would command a fully diluted market value of $2 billion.

Parent Old Mutual, which is offering the entire float, will continue to hold an 81% post-IPO stake in the company. OM Asset Management comprises seven business interests across the US, and two investments represent 78% of the IPO candidate's AUM, including Boston, MA-based Acadian Asset Management and Dallas, TX-based Barrow, Hanley, Mewhinney & Strauss. The company's clients are primarily US-based (80% of AUM) and client types include sub-advisory (34% of AUM), public/government (32%) and corporate/union (20%). Through its affiliates, OM AM's primary asset classes include US equity (40% of AUM), international equity (15%), alternative/RE/timber (15%), global equity (13%), emerging markets equity (10%) and fixed income (7%). OM AM has targeted an initial dividend payout of 25% of economic net income (ENI).

Total ENI revenue increased 16% to $292 million for the six months ended June 30, 2014, driven by higher management fees. The company's ENI operating margin was 37% (up 300 bps) before key employee distributions and 31% (up 200 bps) after after key employee distributions. Its post-tax ENI grew 14% to $67 million. As adjusted for its reorganization associated with the spinoff, OM AM had $178 million of debt as of June 30.

OM Asset Management, which was founded in 1980 and booked $568 million in sales for the 12 months ended June 30, 2014, plans to list on the NYSE under the symbol OMAM. BofA Merrill Lynch, Morgan Stanley, Citi and Credit Suisse are the joint bookrunners on the deal.