(Adds detail, share price, analyst)
By Carolyn Cohn and Noor Zainab Hussain
LONDON, Oct 11 (Reuters) - Financial services group Old Mutual Plc’s UK asset management business posted a sharp drop in third-quarter client inflows and higher investment platform costs, as its parent prepares to split into its four main businesses.
Old Mutual Wealth’s net client cash flows fell to 900 million pounds ($1.1 billion) in the quarter to Sept. 30 from 2.3 billion pounds a year earlier, Anglo-South African parent Old Mutual said.
“We expect markets to remain difficult for some time given the uncertain conditions surrounding the UK’s exit from the European Union,” Old Mutual Wealth CEO Paul Feeney said in a statement.
Net client cash flows fell to 4.1 billion pounds in the first nine months from 4.6 billion in the same period last year.
Old Mutual Wealth will spend a further 200 to 225 million pounds to create a new investment platform, in addition to 225 million pounds spent to end-June, Old Mutual said in a separate statement ahead of a capital markets day.
The unit will also suspend work on building a platform for its business closed to new investment.
“Negatively, the costs of migrating the UK operations to a new funds platform appear to have escalated again,” analysts at KBW said in a note to clients.
Old Mutual’s shares were down 5 percent at 1238 GMT to 198.8 pence, the biggest faller on the FTSE 100 index.
South African-focused stocks such as Old Mutual were already under pressure on Tuesday on news Finance Minister Pravin Gordhan would face fraud charges.
Old Mutual Wealth’s funds under management rose by 14 percent in the first nine months, to 119 billion pounds ($148 billion).
Ahead of its planned break-up, Old Mutual Plc said it would continue to cut its 66 percent stake in its U.S. business OM Asset Management.
For its other three businesses, Old Mutual repeated its preferred break-up option to list its UK and emerging market units and sell some of its stake in South African bank Nedbank .
It said the distribution of the Nedbank stake might occur after its break-up target date of end-2018.
$1 = 0.8042 pounds Editing by Sunil Nair and Mark Potter