Investec plc (LON: INVP) have announced that they will sell 10% of their asset manager division to be renamed Ninety One, in March.
Shares of Investec dipped 1.21% after the announcement and trade at 442p. 29/11/19 11:24BST.
The plan comes as the financial services group announced plans to restructure the business and the division will be spun off as a demerger in March 2020.
In an update published on Friday, Investec said it plans to sell about 10% of Ninety One, which will be split between London and Johannesburg under a dual-listing.
The demerger, which requires shareholder approval, is expected to take place on March 13, it said.
Joint Chief Executive Fani Titi declined to say how much Investec hoped to raise from the share sale but said the move was aimed mainly at delivering long-term value and was in the interests of shareholders and clients.
“Shareholders will benefit from direct ownership of two attractive, independent businesses with management teams focused on long-term growth and value creation,” he said.
Titi added that the simplification of the group would allow better focus and increased accountability.
Investec said at the time that there were “limited synergies” between the asset management business and its specialist banking and wealth & investment divisions.
“We continue to make good progress with respect to the proposed demerger and listing of Ninety One. We remain excited about the benefits of this transaction and are determined to drive simplification across the group, focusing on enhancing the long-term prospects of Ninety One and Investec Bank and Wealth for the benefit of all our stakeholders,” said joint chief executives Fani Titi and Hendrik du Toit.
In addition, the company said 20% of both Ninety One PLC and Ninety One Ltd will be held by Forty Two Point Two, the investment vehicle of management and directors of Ninety One.
Investec said that it plans to use the funds gained from the sale to strengthen the overall capital position of Investec Bank and Wealth, in order to support its growth plans.
In a time where competitors have struggled, the news should not worry shareholders as much as expected.
Both HSBC (LON: HSBA) and Lloyds (LON: LLOY) saw declines in their third quarter profits.
However, noteworthy performance came from Standard Chartered (LON: STAN) and Bank of Ireland (LON: BIRG) who gave shareholders impressive updates.