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Old Mutual investors to share R10.4bn of Nedbank stock

Reducing its stake in the bank to 7.2% from 19.4%.
Image: Bloomberg

South African insurer Old Mutual said on Wednesday it would distribute $734 million in shares in lender Nedbank among its shareholders, reducing its stake in the bank to 7.2% from 19.4%.

The insurer once held a more than 50% stake in the lender, one of South Africa’s big four banks, but sold off most of that in 2018 in a drive to simplify its conglomerate structure.

It said on Wednesday that while it had made sense to retain a minority stake in the bank, the Old Mutual board believed it was now in the best interests of shareholders to distribute the shares.

This simplifies the Old Mutual group and “provides a substantial return of capital to shareholders,” it said in a statement issued after the market close.

The 62.13 million Nedbank shares, worth around R10.4 billion ($734 million) based on Nedbank’s closing share price of R167.67, represent around 12.2% of Nedbank’s issued share capital.

For every 100 Old Mutual shares they own, investors will get just under 1.32 Nedbank shares, the insurer said.

Nedbank said the move would increase its proportion of shares freely tradeable on the stock market.

“Any existing commercial relationships with Old Mutual will continue to be underpinned by arms-length commercial agreements,” Nedbank said.

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You get roughly R2.20 before 20% CGT. R1.76 after CGT

The share will drop on the Ex-Div date end October/begin November.

The Covid-19 3rd wave in full swing.

How much money will Old Mutual need to pay for Life insurance payouts?

The Nedbank share payout to Old Mutual shareholders will weaken the Old Mutual share.

The company NAV will drop due smaller assets, similar to when paying out dividends.

Any scraps perhaps for us neglected policy holders ?

I got my answer about Old Mutual when one of the Analysts on D D a y t v got asked if he thinks Old Mutual provisioned enough for the 3rd wave of Covdid-19

Lyk my die gratis Nedbank aandele help nie, die aandeel val soos n piano

It makes more sense to me (I’m not the CFO or a financial guru) that the money from the selling of Nedbank shares be used to pay OMU debt and bolster the funds available to pay for Covid-19 claims.

End of comments.

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