29th Nov 2019 08:11
(Alliance News) - Investec PLC and Investec Ltd on Friday said they and their shareholders will benefit from the demerger of the asset management unit, as it has long-term growth prospects.
The company said back in September 2018 that it was pursuing the demerger of Investec Asset Management following a strategic review.
Investec said at the time that there were "limited synergies" between the asset management business and its specialist banking and wealth & investment divisions.
On Friday, Investec said its asset management business will be rebranded when its demerger from its banking parent is concluded on March 13 next year. The unit will be named Ninety One, with Ninety One PLC incorporated in England and Wales, and listed on the London Stock Exchancge, while Ninety One Ltd incorporated in South Africa and listed on the Johannesburg Stock Exchange.
"We continue to make good progress with respect to the proposed demerger and listing of Ninety One. We remain excited about the benefits of this transaction and are determined to drive simplification across the group, focusing on enhancing the long-term prospects of Ninety One and Investec Bank and Wealth for the benefit of all our stakeholders," said joint chief executives Fani Titi and Hendrik du Toit.
Investec explained that the demerger brings greater focus and simplicity to the Investec Specialist Banking and Wealth & Investment businesses, which should enhance the returns for shareholders and enable the businesses to grow with discipline.
"Our shareholders are set to benefit from the resulting value creation through their direct ownership of two distinct businesses, well-positioned for long-term growth," added Titi and du Toit.
Following the demerger, Investec said it expects to hold 56% of Ninety One PLC and 53% of Ninety One Ltd.
In addition, the company said 20% of both Ninety One PLC and Ninety One Ltd will be held by Forty Two Point Two, the investment vehicle of management and directors of Ninety One.
Investec shareholders, meanwhile, will retain their shareholding, and will receive one Ninety One share for every two Investec shares.
Investec said it intends to use the net proceeds from the Ninety One share sale to strengthen the overall capital position of Investec Bank and Wealth, and supporting its growth plans.
The transaction is expected to have a positive impact on the CET1 ratio of Investec PLC, it said, improving by 1.3% to 12.0%, while the CET1 ratio of Investec Ltd, is expected to advance by 0.6% to 12.3%.
The company said it will be seeking shareholder approval for the transaction at its general meeting on February 10.
Investec Ltd shares were trading 2.9% lower in Johannesburg on Friday morning at ZAR83.31 each, while Investec PLC was down 3.7% at ZAR81.90 a share.
In London, Investec PLC shares were down 1.4% at 441.80 pence each.
By Evelina Grecenko; [email protected]
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