Investec Limited intends to execute a share purchase and share buyback programme of up to R2.5bn — or about £100m — making it the latest among top JSE-listed companies to buy back securities.
The financial services group said on Wednesday that it will purchase Investec Plc ordinary shares and repurchase Investec Limited ordinary shares until the end of March.
Investec Group outlined plans in May to buy back its shares. The Anglo-SA group’s previous share purchase and buyback programme was launched at the end of 2022 and lasted 18 months at a cost of R7bn.
Investec Limited has entered into a mandate with Investec Markets — its broker — to conduct the on-market purchase of Investec Plc ordinary shares and the repurchase of Investec Limited ordinary shares.
The broker will act as principal and will purchase the shares, on the Johannesburg and London stock exchanges or other trading venues in the UK and SA. The shares will then be sold on by the broker to Investec Limited.
The broker will not purchase shares or securities relating to the shares on trading venues based in the US, it said.
The repurchased Investec Limited shares will be cancelled and reinstated as authorised but unissued shares in the share capital of Investec Limited.
The purchased Investec Plc shares will be treated as if they were treasury shares in the consolidated annual financial statements of the Investec Group.
Business Day reported this week that top JSE-listed companies are returning more cash than before to shareholders, with groups resorting share buybacks — the oldest trick in high-finance books to prop up shares that are trading at sizeable discounts to their intrinsic value.
With SA corporates holding excess cash, unable to find profitable investment opportunities, many are resorting to share repurchases — a more tax-efficient method of rewarding shareholders.
SA gave share repurchasing the green light in 1999. Naspers has been an outlier, pursuing an aggressive, unprecedented open-ended share-purchase programme, and clinching some of its largest merger and acquisitions (M&A) deals in its illustrious history.
Naspers and Prosus announced an open-ended share repurchase programme in 2022 that has helped the groups close the significant discount to their intrinsic value.
The repurchase programme has returned more than $38bn to shareholders by end-May, which increases to nearly $50bn including the repurchases since 2020.
Africa’s largest bank by assets, Standard Bank, has spent about R7bn over the past 18 months buying back its shares.
Standard Bank CFO Arno Daehnke said share repurchases would continue to feature in the bank’s capital management strategy.
Nedbank in 2023 announced a R5bn share-repurchase programme, which coincided with its highest dividend payment yet. Absa said in April it was to buy back its preference shares.
The likes of African Rainbow Minerals, Glencore, British American Tobacco, Momentum and AB InBev have also embarked on huge share repurchase transactions.
With Kabelo Khumalo
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