Investec is planning to spin-out and float its £109bn ($142.6bn) investment business as a separate entity, Investec Asset Management (IAM), as reported by FSA sister publication Portfolio Adviser.
Like the parent group, IAM will be dual-listed on the London and Johannesburg stock exchanges.
News of the de-merger boosted shares in the group 10% higher to 533p on Friday morning, making the investment house the highest riser of the FTSE 250. Its shares listed in Johannesburg were also up 10%, at 10,350 rand.
In a stock exchange announcement on Friday, the group said it had conducted a strategic review and concluded there were “limited synergies” between its Specialist Banking and Wealth & Investment divisions with IAM.
Enhanced growth potential
Investec said separating its investment arm would simplify the parent group’s structure, while enhancing the long-term prospects and growth potential of both businesses.
Since launching in 1991 IAM has grown third-party assets under management (AUM) from £40m to £109bn, as at 31 August 2018. It has organically grown AUM at an annual compound rate of 13.7% over the last 10 financial years.
The remaining group will focus on growing market share in its niche businesses, improving its digital offering, attracting more discretionary funds and driving costs down.
Investec CEO Stephen Koseff and managing director Bernard Kantor said that now is “the right time to de-merge” and support the asset management group in the next phase of development.
“We believe the transaction will allow these businesses to fulfil their full potential and shareholders will benefit from future value creation through direct ownership of two separately-listed companies,” they said.
Executive restructure
As part of the reorganisation, Fani Titi and Hendrik du Toit will become joint CEOs of the group starting 1 October 2018. Titi will take the reins of the Investec business while du Toit will oversee the separate asset management business.
Both Koseff and Kantor will step down from their respective roles but will continue to serve as executive directors and assist the co-CEOs until the IPO of the asset management business is complete.
The incoming CEOs said on Friday: “We are confident that the proposed de-merger and listing of IAM provides the simplicity of structure and focus to enhance the long-term prospects of IAM and the remaining group for the benefit of our shareholders, clients and employees.
“Investec has a heritage and culture of which we are proud, shaped by the dedication and commitment of our employees and the support of our clients.
“We look forward to working closely as joint group CEOs during this phase of our evolution and to implement this transaction which we expect will create significant shareholder value over time.”
The transaction is subject to regulatory approval.
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