Investec, the specialist bank that owns 25% of asset manager Ninety One, has announced that it will distribute 15% of its stake to its shareholders.
The private banking group and wealth manager, which is listed in Johannesburg and London, said the 15% stake was surplus to its capital requirement, though it planned to retain 10% of Ninety One.
Investec said it would update the market in due course on the process and terms of the planned distribution, which remain subject to shareholder and regulatory approval.
The news was announced in the bank’s results on Thursday, which showed attributable profit rose 129.4% to £250m in the six months to end-September. That enabled the bank’s board to propose an interim dividend of 11p.
Investec’s stake in Ninety One — which is 16.3% held by its UK business and 8.7% by its SA operations — comes after it spun off its former asset management unit in 2020. Ninety One, previously known as Investec Asset Management, was listed separately in March 2020.
That unbundling saw Investec offload 55% of the asset manager to its shareholders. The combined value of the 55% stake sold in 2020, along with the 15% Investec wants to distribute to shareholders now, is about £1.7bn (R35.6bn) at prevailing market prices, CEO Fani Titi told journalists shortly after the release of the interim results.
“We’re really pleased that we can get this capital back to our shareholders,” said Titi.
“Earnings have recovered particularly significantly and we are now at pre-Covid levels so we have the confidence that the excess or surplus capital that we have we can start to return to our shareholders.”
Titi said Investec would “remain flexible” on its remaining 10% shareholding in Ninety One, which it regards as being “part of the capital stack” of Investec. “At some point we will review our options of whether we want to turn that into cash or not,” he said.
Investec originally planned to offload more than the 55% of Ninety One it distributed when the asset manager listed separately in March 2020 but held off after markets were roiled by Covid-19. Nevertheless, Ninety One went ahead with the demerger, a move that has seen its share price rocket while a market recovery has pushed its assets under management to a record £140bn.
Investec is continuing with a plan first announced in early 2019 to reduce its on-balance-sheet investment portfolio to about R15bn. The bulk of that investment, which was worth about R19bn at end-March, is wound up in property and minority equity stakes in mostly unlisted entities.
Richard Wainwright, CEO of Investec SA, said that will involve reducing the bank’s 24.3% stake in the Investec Property Fund, which it manages, though it does not plan to exit the fund entirely. Also on the chopping block is its 47.4% holding in Investec Equity Partners, essentially a legacy private equity vehicle.
“Given market conditions, it’s quite difficult to sell or reduce that exposure, but it’s still our objective to do that,” Wainwright told Business Day. “It’s not strategic or core to us.”
Investec sees its UK business overtaking its SA operations over the next decade as the greater wealth and relative size of the British economy allows it to grow faster in that market.
theunisseng@businesslive.co.za
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