Investec Asset Management to be spun out as separately listed company
Investec announced the demerger and listing of Investec Asset Management on Friday, following a strategic review process carried out by its board and executive directors.
The FTSE 250 firm said the decision was made as there were “compelling” current and potential linkages between its specialist banking and wealth and investment businesses, however there were “limited synergies” between those two divisions and Investec Asset Management (IAM).
It said Investec Specialist Banking and Investec Wealth & Investment would remain part of the group's current dual listed companies structure, with the transaction designed to simplify the group and focus IAM and the remaining group on their respective growth paths.
Investec intended for IAM to be listed on the London Stock Exchange, with an inward listing on the JSE. The IAM management stake in the company would be retained, and the remaining group "may" retain a minority stake in IAM.
The board said that would “enhance” the long-term prospects and potential of both businesses for the benefit of their shareholders, clients and employees.
On the management front, Fani Titi and Hendrik du Toit were set to become joint chief executive officers of the group on 1 October, with Stephen Koseff and Bernard Kantor stepping down from their roles as CEO and managing director, respectively, to serve as executive directors with primary responsibility for assisting the incoming joint CEOs until completion of the transaction. Following the implementation of the transaction, Fani Titi would lead the remaining group and Hendrik du Toit would lead IAM.
The Investec board said the structure and composition of the boards of the remaining group and IAM would be determined “in due course” as part of the transaction implementation.
Post the implementation of the transaction, shareholders of the Investec Group would have a direct shareholding in IAM in addition to their holding in the remaining group, with the “precise mechanics” of the demerger and listing to be communicated in due course
“Our individual businesses are well-positioned strategically, with strong market positions and good prospects,” said CEO Stephen Koseff and managing director Bernard Kantor in a joint statement.
“It is now the right time to demerge and list our asset management business to support it in the next phase of its development.”
Koseff and Kantor said that in recent years, the company had also made “good progress” in expanding its banking and wealth management franchises in its two key markets, and improving their operational and financial performance.
“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.”
Titi and du Toit said they were “confident” that the proposed demerger and listing of IAM provided the simplicity of structure and focus, to enhance the long-term prospects of IAM and the remaining group for the benefit of shareholders, clients and employees.
Investec shares spiked up by double-digits to above 540p in early trade on Friday.
Broker Numis said the decision to separately list the IAM business on the LSE in the next 12 months "should make the value in the group clearer".
Russ Mould at broker AJ Bell said the spin-off plan "looks like a sensible decision as it should allow management more freedom to drive that business forward and not be constrained by having to follow the strategy of the current parent which is predominantly a specialist banking business."
"Unbundled companies have the freedom to be more entrepreneurial. From an investment perspective, demerged companies are often valued at a greater sum than when they were combined – which explains why Investec’s share price jumped on the break-up announcement.
"Separation can sometimes entice takeover interest should a predator have been interested in part of a company but was previously put off from making an offer as it didn’t want to swallow the whole group."