£400m rights issue at Old Mutual

ANGLO-South African insurance and financial services giant Old Mutual is launching a five billion rand (£400m) rights issue to shore up its troubled banking subsidiary Nedcor.

Announcement of the huge fundraising coincided with a £74m decline in Old Mutual's 2003 operating profits from £724m.

This was due to a disappointing financial performance from Nedcor, chief executive Jim Sutcliffe admitted.

Old Mutual will put up at least 2.5bn rand to pay for new shares, accounting for its 52% shareholding in South Africa's third- largest bank. But Old Mutual finance director Julian Roberts confirmed it is ready to take more shares as joint underwriter alongside Merrill Lynch and Deutsche Bank.

'The message is we are right behind the bank,' Roberts said as he dismissed talk of selling off its Nedcor shareholding.

Nedcor chairman Chris Liebenberg is stepping down as chairman in May, bringing forward his retirement from October. This ends the changes Old Mutual initiated at Nedcor last year.

Stripping out Nedcor, Old Mutual turned in 30% growth in operating profits to £656m.