RMB to give shareholders R130bn FirstRand stake

South African investment firm RMB Holdings (RMH) said it planned to distribute among shareholders its stake in lender FirstRand, worth about R130 billion, as part of restructuring.

RMH has an almost three-decade history of investing in financial services, and FirstRand was born out of the group. It is the bank’s largest shareholder with a 34% stake.

RMH’s largest investor, Remgro, has an almost 4% stake.

RMH said it had reviewed its investment portfolio and also decided to sell its R3.35 billion in property assets.

“The board’s intention is to distribute the FirstRand shareholding to RMH shareholders and to monetise the property assets in an orderly manner over time,” the company said.

The distribution of the stake will take place before the property transactions, it said, and will be net of the settlement of the FirstRand debt and associated costs, as well as “an appropriate capitalisation of RMH”.

RMH CEO Herman Bosman said yesterday unbundling the stake, bringing a more than two-decade relationship to an end, could unlock between R10 billion and R20 billion of value for its shareholders trapped in its current structure.

RMH shares trade at a discount of between 8% and 12% to its investment portfolio, of which its 34% stake in FirstRand is its most significant asset, he said, adding initially the firm thought this was an aberration, but it has persisted and is unlikely to reduce.

“On the one hand you’ve got 15 billion of unlocked value ... and you weigh that up against the benefits of the structure,” he said.

“Given the size and maturity and the stage of development (of FirstRand), the value-add that we do bring is not commensurate with the opportunity cost.”

A detailed announcement on the restructuring, including the approvals it would require and a timetable, is expected to be made before the end of the first quarter of 2020, its statement said.

In a separate statement, Remgro, said it would also distribute to shareholders its 28% holding in RMH – worth just over $2 billion, according to Eikon data – and its stake in FirstRand, though how this would work was subject to further consideration.

“The boards of RMH and Remgro have further agreed to work together to determine the most practical and effective way to implement (the distributions),” its statement said. – Reuters