Old Mutual buys Marriott

Posted On Friday, 12 August 2005 02:00 Published by eProp Commercial Property News
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Giant insurer Old Mutual has struck a deal to buy Marriott, the Durban-based merchant bank, unit trust and property fund managers

Simon Pearse Mutual beat two other suitors to the deal - Investec and Rand Merchant Bank.

The deal, if it goes through as is expected, will turn Old Mutual into the biggest property asset manager in the country, with property worth R18bn. Madison holds property assets worth R13bn, followed by Liberty with R12bn and Investec Property Group with about R11bn.

The Income Specialists, a division of Marriott, manages more than R4bn in clients' - mainly pensioners' - funds in 10 unit trusts, R2bn of which is in two trusts investing in listed property funds. Its property division manages R10bn in property assets including four listed funds: Martprop, SA Retail, Ambit and Oryx. It also has a merchant bank called Marriott Property Bank.

Marriott and its four listed funds have been vulnerable to takeover.

The company has an illustrious past as a founder of the listed property sector and still runs the largest unit trusts that invest in property shares. It is an old Natal business, owned by the interests of shipping magnate Murray Grindrod, Mick Hyatt and management. Hyatt's son-in-law, Simon Pearse, was recently appointed CEO.

But there have been signs that Marriott has had difficulty adjusting to today's more cut-throat business life.

One insider says that protecting its fees had become a preoccupation of the group. For instance, against the trend of listed funds opting for independent valuations, Marriott persists in using a related company to do its valuations - which influences the asset management fees to Marriott Property Services, which is also the property manager. Brokers complain that the group tries to keep all possible commission-earning sales in-house, too.

Mutual is likely to absorb the company into its own operation in time.

The FM has not been able to confirm the price paid for Marriott but asset managers are usually priced at between 1,5% and 2,5% of assets under management. That would price Marriott's fund management at between R200m and R400m, including the merchant bank. We understand that the price paid is closer to the upper limit of this range.


Last modified on Tuesday, 06 May 2014 14:55

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