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Investec to sell 10% of asset manager in March spin-off

CEO says the move is aimed mainly at delivering long-term value and was in the interests of shareholders and clients.
Investec shareholders would receive one Ninety One share for every two Investec shares, both for its Johannesburg and London-listed stock. Image: Moneyweb

Anglo-South African financial services group Investec will sell about 10% of its asset management business, to be renamed Ninety One, when it is spun off as part of a demerger expected in March.

Investec announced the structural overhaul last year in a move intended to strengthen the asset management business and Investec’s remaining banking and wealth operations.

In an update published on Friday, Investec said it plans to sell about 10% of Ninety One, which will be split between London and Johannesburg under a dual-listing.

The demerger, which requires shareholder approval, is expected to take place on March 13, it said.

Joint chief executive Fani Titi declined to say how much Investec hoped to raise from the share sale but said the move was aimed mainly at delivering long-term value and was in the interests of shareholders and clients.

“Shareholders will benefit from direct ownership of two attractive, independent businesses with management teams focused on long-term growth and value creation,” he said.

He added that simplification of the group allowed for better focus and increased accountability.

London-listed shares in Investec, which manages more than 119 billion pounds ($154 billion) in assets, were down 2.3% at 0829 GMT. Its Johannesburg-listed shares were down 2%.

The company said Investec shareholders would receive one Ninety One share for every two Investec shares, both for its Johannesburg and London-listed stock.

Following the transaction, Investec expects about 55% of Ninety One to be held by existing shareholders, with 15% being retained by Investec and 20% being held by Forty Two Point, the investment vehicle through which the management and directors participate in the business.

The demerger, which follows similar moves by Prudential , Old Mutual and Deutsche Bank as fees fall and costs rise in the fund management sector, is expected to incur transaction costs of at least 56 million pounds.

Net proceeds of the share sale will be used to cover these costs as well as tax liabilities arising from the transaction while strengthening Investec’s capital position and supporting its growth plans, the company said. 

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Money Laundering is a serious offense!
Fortunately, the delisting will establish the Asset Management side as an independent business from the Investec Group and maintains their complete focus on the future of their investment management business.
I am not surprised to see Investec sell about 10% of its asset management business, to be renamed Ninety One, when it is spun off as part of a demerger expected in March.
Yes the demerger, might follow similar moves by Prudential, Old Mutual and Deutsche Bank as fees fall and costs rise in the fund management sector, is expected to incur transaction costs of at least 56 million pounds.
I think Investec needs to top up on their reserves, due to their Kebblegate shenanigans, which could be in excess of ZAR 2 billion, in their upcoming court case the Randgold minority shareholders.

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