DURBAN - The shares of Investec plc and Investec Ltd plunged more than 49 percent yesterday following the completion of the Ninety One demerger in line with a 11.64 percent decline in the JSE All Share Index.
Investec plc shares fell to R36.61 a share yesterday afternoon from Friday’s close of R64.57, while Investec Ltd dropped to R37.66 from R64.99 recorded on Friday.
Ninety One Ltd’s share price closed at R32.90 following an opening of R55 during its listing.
Vestact portfolio manager Michael Treherne said the drop was a direct result of the Ninety One spin-off.
Treherne said while the stock fell, they were bound to bounce back to add back the value of those new shares to get the true price of Investec.
“If you add back the value of the Ninety One shares that you received, the Investec share price is still down 23percent, higher than the other banking stocks. It might be the market signalling that they prefer the asset management business. On such a volatile day like today (Monday), where emotion is driving share prices, it is very difficult to know a particular reason for the share price drop,” Treherne said.
Sasfin Securities’ senior portfolio manager Nesan Nair also pointed the overall decline in the market as the reason for the decline in Investec’s share price.
“Some of the decline is a result of the market, but most of it is the unbundling of Ninety One,” Nair said. Ninety One plc and Ninety One Ltd listed on both the London Stock Exchange and the JSE yesterday.
The listing comes after the strategic review of the Investec group, which consists of Investec Ltd and Investec plc and their respective subsidiaries in 2018. The spinning-off followed Investec’s decision to proceed with the demerger of its asset management business from the specialist banking and wealth and Investment operations.
The group said the demerger would focus Investec and Ninety One groups on their respective growth paths. It said this would enhance the long-term prospects and potential of both businesses for the benefit of their shareholders, clients and employees.
Hendrik du Toit, a founder and chief executive, said the demerger and listings marked a historic moment for Ninety One, despite extraordinary market volatility.
“In spite of the current market volatility, we are excited about the future. We are confident in the resilience of our capital-light business model and its organically developed, specialist, active investment offerings. Ours is a long-term story of a unique business with a carefully-developed culture, a commitment to employee ownership and a long track record. We remain committed to serving our clients to the best of our abilities by building a better firm, pursuing better investment and contributing to a better world,” Du Toit said.