Old Mutual to provide ‘substantial’ return of capital to shareholders as it unbundles over 12% stake in Nedbank

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  • Old Mutual’s share price jumped by almost 6% to R13.65 in early trade on Thursday
  • Says the unbundling process will simplify the Group
  • Old Mutual will be left with a 7% share in Nedbank

FINANCIAL services giant, Old Mutual Limited which is listed on the Johannesburg Stock Exchange, Namibia, Botswana and Zimbabwe (currently suspended) Stock Exchanges, has cheered investors after announcing plans to unbundle 12.2% of its 19.4% stake in Nedbank, South Africa’s fifth-largest bank by market capitalisation and fourth largest by total assets and headline earnings.

In an announcement on Wednesday, the Group said that following an internal review of the Nedbank Stake, the Board believes that it is in the best interests of Shareholders to dispose of a majority of its Nedbank stake through the Unbundling, as this:

–       simplifies the Group, allowing investors to focus on the core operations of Old Mutual;

–       allows Shareholders to participate more directly in the differentiated investment cases of Old Mutual and Nedbank; and

–       provides a substantial return of capital to Shareholders.

The unbundling of the 12.2% stake in Nedbank to Old Mutual shareholders valued at R10.3 billion based on Nedbank’s market capitalisation yesterday, would be by way of a distribution in specie.

Old Mutual’s share price jumped by almost 6% to R13.65 in early trade on Thursday, showing a positive response from shareholders to the plan to further dispose of a larger chunk of its remaining stake in Nedbank.

In 2018, Old Mutual unbundled 33% of its 53% stake held in Nedbank at the time to shareholders.

The Group affirmed that it was committed to being a significant minority shareholder of Nedbank (with the right to nominate a director to the boards of Nedbank and Nedbank Limited) whilst retaining a right to review the Nedbank stake as appropriate from time to time, in accordance with the protocols outlined in the relationship agreement concluded between Nedbank and Old Mutual on 19 April 2018.

This unbundling is subject to the receipt of regulatory approvals, including approval from the Prudential Authority.

If passed, Old Mutual will be left with a 7% share in Nedbank.

The Group said that shareholders on its Namibian share register, Malawian share register, UK share register and Zimbabwean share register will be paid the local currency cash equivalents of the Cash Proceeds.

“The Cash Proceeds will be converted to local currency at the effective rate quoted by Old Mutual on or before the date upon which payment of the Cash Proceeds is made to the relevant Shareholders (‘Applicable Rate’),” it said.

Old Mutual is a premium African financial services group that offers a broad spectrum of financial solutions to retail and corporate customers across key market segments in 14 countries. Old Mutual’s primary operations are in South Africa and the Rest of Africa, and it has a niche business in China. With over 176 years of heritage across sub-Saharan Africa, Old Mutual is a crucial part of the communities it serves and broader society on the continent.

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