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The transaction will reduce the entry points to FirstRand and will result in Remgro shareholders holding a direct stake in the banking group.
Remgro plans to unbundle its shares in RMB Holdings (RMH) to its shareholders on 8 June as the two investment companies take steps to reduce the discount their shares trade at relative to their portfolios of investments.
In a coordinated transaction, Remgro will unbundle its stake in RMH to its shareholders, who will then hold a direct stake in the investment holding company. RMH then plans to distribute its stake in FirstRand to its investors as a dividend in specie towards the end of June in a move it says will create R5.41 billion in value.
Remgro owns 28.2% of RMH, whose biggest investment is its 34% stake in FirstRand. It also owns a further 3.9% direct interest in the banking group, which it plans to keep. Remgro traded at a 19% discount to its intrinsic net asset value (iNAV) per share of R240.93 at the end of December. Other investments include Mediclinic, Distell, Grindrod, Total and Rand Merchant Investment Holdings, amongst others.
Due to the growth in FirstRand’s share price, Remgro said RMH had taken an overweight position in its portfolio. The unbundling would reduce the discount by reducing the three listed entry points into the underlying operations via FirstRand, RMH and Remgro. It would also enable its own shareholders to participate in the RMH unbundling, giving them a direct holding in FirstRand.
The Remgro Unbundling also presents an opportunity to rebalance the maturity of Remgro’s remaining investment portfolio, as well as the relative contribution of the remaining portfolio investments to enable greater impact and shareholder value creation,” the company said.
Under the transaction, Remgro shareholders will receive 0.699 RMB shares for every Remgro share.
Remgro closed 3.3% higher at R142.67 yesterday while RMH rose 0.2% to R52.87 and FirstRand gained 1.5% to R41.23. The announcement was made after the close of trade.
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