Remgro and RMB to unwind Firstrand
What’s happening with Firstrand and Remgro through RMB restructure?
RMB Holdings to redistribute Firstrand holdings
RMB Holdings has announced that after reviewing its investments, the board has resolved to restructure its portfolio of assets and liabilities.
Within the restructure, the group is looking to distribute its Firstrand shareholding to RMB shareholders:
- The group has a 34.1% shareholding in Firstrand which has a current market value of R130bn
- The distribution of Firstrand shares will be net of the settlement of Firstrand debt, associated costs and an appropriate capitalisation of RMB post the distribution
- The Firstrand debt amounts to R3.35bn
- The restructure will be subject to the regulatory and shareholder approval
The distribution of RMB’s Firstrand assets is accompanied by news that the group would be looking to unwind its R3.35bn property portfolio as well, although this will be done post the Firstrand allocation.
Remgro Ltd
Remgro’s investment within the banking sector comprises of a 28.16% holding in RMB and a 3.92% holding in Firstrand ltd. The distribution of Firstrand equity to shareholders by RMB suggests that the Remgro’s holding of Firstrand would increase more than 3-fold.
Remgro has also released a cautionary statement guiding that the group will investigate the distribution of its holdings in both RMB and Firstrand to shareholders. It is unclear as to whether this will be the entire holding of its banking portfolio or part thereof. The group has guided that it will make a more detailed announcement on the matter before the end of the first quarter in 2020.
The market response to the news has been positive for the share price of Remgro (adding more than 5% on the day). The suggestion is that the unbundling could unlock value for shareholders by helping narrow the groups 22% discount to Net Asset Value (which has already started to materialise).
The distribution will increase the weightings of both the groups listed and unlisted assets, the most substantial of which being the healthcare (Mediclinic) and consumer products (Distell, Siqualo Foods and RCL Foods) portfolio. These investments account for roughly 18% and 16% of the group’s current intrinsic value (the Banking portfolio is currently estimated to be 34% of the Remgro portfolio).
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