Planned restructuring a boost to Remgro shares
JOHANNESBURG – Investment group Remgro jumped 7.6 percent on the JSE in anticipation of a boost to the company’s value following news of the planned restructuring of JSE-listed Rand Merchant Investment Holding (RMH).
RMH chief executive Herman Bosman late on Tuesday suggested the group give shareholders its 34.1 percent stake in FirstRand, the parent company of First National Bank valued at R130 billion, as part of restructuring of the group’s portfolio of assets and liabilities.
RMH’s share price surged 5.21 percent to close at R32.72. Remgro ended the day 6.12 percent higher at R196.
However, FirstRand tumbled on the news, falling 1.53 percent and closing at R67.50.
Bosman said the group planned to sell off its property assets and would remain listed on the JSE until the property process was complete.
RMH is the founding shareholder in FirstRand and is focused on investing in banking and property businesses.
Remgro, chaired by billionaire Johann Rupert, is the biggest shareholder in RMH, which contributed R2.4bn to Remgro’s headline earnings in 2018 on the back of First Rand’s performance.
A detailed announcement is expected to be made before the end of the first quarter of 2020.
Stellenbosch-headquartered Remgro said it would follow in RMI footsteps by distributing shares to shareholders. “The board of Remgro has resolved in principle, to pursue the distribution to shareholders, in full or in part, of Remgro’s exposure to RMI and FirstRand,” said Remgro.
Michael Treherne, a portfolio manager at Vestact Asset Manager, yesterday said that the restructuring was not capital flight.
“It is just the restructuring of a complicated holding and outdated holding structure,” said Trehern.
In September RMI said it aimed to diversify its income stream and the distribution of its assets as normalised earnings jumped 7 percent in the year to June on its investment in FirstRand.