Investec shares leap on news asset management unit will go its own way
Investec announced on Friday the proposed demerger and separate listing of Investec Asset Management (IAM) from the larger specialist banking group.
In mid-morning trade the share price was up 10% at R104.50.
The move will see Investec Asset Management list on the London Stock Exchange with an inward listing on the JSE once shareholder approval and regulatory permissions have been obtained.
Stephen Koseff, the outgoing CEO of Investec, said the decision comes in conjunction with the executive management changes that were announced earlier this year, and which prompted a strategic review of the business.
“The outcome of the strategic review found the group comprises a number of successful businesses with different capital requirements and growth trajectories. While there are compelling current and potential linkages between the specialist banking and wealth management business there are limited synergies with Investec Asset Management.”
The specialist banking group will retain a residual stake in Investec Asset Management, which will, in due course, rebrand itself. Hendrik du Toit will lead the new asset management entity while Fani Titi will lead the specialist bank and wealth management business. Both have been named to take over from Koseff on October 1.
The pair will manage the demerger and, following its completion, Titi will head the specialist bank while Du Toit will take the asset management business down a new path.
“This is about focus and simplicity of business structure. The dual-listed structure is too complex and cumbersome for an asset management business. So while we are separating revenue and income streams, we are not separating the cultural linkages of the two businesses,” said Du Toit.
“We think the execution risk of carving IAM out of the larger Investec group is low. We think it will create significant value for shareholders over time. Our shareholders have argued there is value trapped in the structure because of complexity, and by doing this we can allow the businesses to go forward and create value,” said Titi.