Remgro to keep FirstRand stake in unbundling
Retaining the banking holding company is intended to provide additional balance sheet capacity
Remgro, the listed investment holding company chaired by Johann Rupert, intends to proceed with unbundling its 28.2% interest in Rand Merchant Bank Holdings (RMH) to shareholders but will hold on to its stake in FirstRand.
Remgro said it will retain its 3.9% interest in FirstRand, “to provide additional balance sheet capacity to support growth in Remgro’s existing portfolio and its ability to pursue new opportunities that may arise”.
FirstRand was founded by GT Ferreira, Laurie Dippenaar and Paul Harris, who together with the financial backing of Rupert built the country’s largest financial services company by market capitalisation using such brands as First National Bank (FNB), WesBank and Rand Merchant Bank.
Rupert hailed the “end of an era” when the unbundling was announced to the market at the end of last year and said the ownership structure of FirstRand had outlived its purpose as the founders began to depart from the boards they had been serving on.
It was also becoming prudent to diversify Remgro’s portfolio; because of the success of FirstRand, it had come to occupy 40% of Remgro’s net asset value.
“It’s a business where we have no control or influence, nor that we have sought to influence. It just no longer made sense for us,” Rupert said.
Remgro said in November it intended to unbundle its interest in RMH and FirstRand, the parent company of FNB. RMH owns 34% of FirstRand and also intends to distribute its stake to shareholders. RMH said in a separate statement on Tuesday it remained committed to its restructuring but was reconsidering the timing of this and the nature of the transaction, which has found support from Remgro.
“RMH shareholders are advised that, though still committed to the restructuring, given the unprecedented market turmoil being experienced in SA and globally as a result of Covid-19, the RMH board is currently assessing the optimal timing and detailed transaction steps required to give effect to the restructuring,” the group’s statement read. An update on the transaction is expected to be released on or before April 14.
RMH’s share price has fallen 42% so far in 2020, while the JSE has fallen almost 24%. Remgro has fallen 39.52% in the year to date while FirstRand has fallen 40.3%./ with Warren Thompson