Investec to spin off £109bn funds arm
South African financial services group Investec is set to demerge and separately list its £109bn asset management business following a strategic review.
The review found “limited synergies” between Investec Asset Management (IAM), which manages £109bn of assets in the UK, South Africa, Australia and the US, and the firm’s specialist banking and wealth management businesses.
The asset management unit will be listed on both the London as well as Johannesburg stock exchanges.
Chief executive and co-founder Stephen Koseff, who is stepping down later this year after four decades with the firm, said demerging the funds unit will be like seeing his daughter leave home.
“It was very hard when she left home to get married, but now I’ve got three wonderful grandchildren – it’s hard but very rewarding later on,” he said.
Koseff said a split made the most sense as it will mean the group is not “mixing apples and pears with the revenue streams”.
Under the deal, the current head of the asset management business, Hendrik du Toit, would be the chief executive of that business, while Fani Titi would become the chief executive of investment banking business, or what is left of Investec.
Senior management are set to receive a windfall from the demerger as the division is likely to be worth between £1.8bn and £2.2bn after the float.
Five years ago, the group agreed to sell 15% of its asset management unit to its staff at a price that at the time valued the business at £1.2 bn. The deal was done through a trust structure in which each employee owns a portion of the underlying trust assets.
IAM’s chief executive, Hendrik du Toit, and IAM’s chief operating officer and chief financial officer, Kim McFarland, are participants in the trust.
“We are confident that the proposed demerger and listing of IAM provides the simplicity of structure and focus to enhance the long-term prospects of IAM and the remaining Group for the benefit of our shareholders, clients and employees,” Titi and du Toit noted.
Investec Asset Management will join quoted fund managers such as Schroders, Jupiter and the recently listed Quilter.