Investec unit to go it alone now

SHARES JUMP: BIGGEST INCREASE SINCE MARCH 2009

It is like letting one of our children go, says Stephen Koseff.

Investec Plc is spinning off its asset-management unit after a strategic review found there is little synergy with its banking and wealth and investment divisions. The stock rallied the most in nine years.

Investec Asset Management, which oversees £109 billion across its offices in Britain, South Africa, Australia and the US, will be headed by the money manager’s founding CEO, Hendrik du Toit, Investec stated yesterday. The remaining businesses will be headed by Fani Titi.

The company plans to trade the money manager ’s securities in London with another listing in Johannesburg as Investec’s founding chiefs, Stephen Koseff and Bernard Kantor, prepare to step down next month after more than 40 years with the company.

It follows a similar step by Deutsche Bank AG, which in March spun off its asset management unit, and a split by Old Mutual Plc that broke up its UK wealth management and African banking and insurance businesses.

This is a “very positive” move that will help Investec Asset Management achieve a higher valuation than within the larger group, said Richard Hasson, a money manager at Electus Fund Managers. Investec Asset Management “has been one of the biggest asset gatherers as a percentage of their assets under management over the last ten years, so it really has been a good story.”

Shares in Investec jumped as much as 13%, the biggest increase since March 2009, to 547.60 pence in London.

Investec Asset Management accounted for about a third of operating profit in the 12 months through March. The division will probably report earnings for the

It really has been a good story

six months through September 30 that will be “ahead of” the year earlier period, following net inflows of £4.4 billion, Investec said in a separate statement.

Investec’s specialist banking division, which accounts for more than 70% of its operating earnings, will also post better fiscal first-half profit than a year ago, mainly because of an improved performance from its UK business. Wealth and investment is lagging last year’s interim earnings, Investec said.

‘One of our children’

The separation of the asset-management unit will support the next phase of its development, Koseff and Kantor said in the statement. While the precise mechanics of the “demerger and listing” still need to be finalised, the company is hoping to complete it within 12 months, subject to regulatory approvals, Koseff said.

“It is like letting one of our children go,” he said. “We have been building this business with Investec Asset Management, who will retain its stake in the business, while Investec may keep a minority stake in the money manager,” the company said. – Bloomberg