Chatted to FirstRand co-founder Laurie Dippenaar (71) yesterday, hearing the back story to an unbundling of shares which will unlock tens of billions in trapped value. The distribution of FirstRand shares has been triggered at both RMH, which owns 34% of the bank, and Remgro, for which RMH/FirstRand was 35% of its asset base and delivered 45% of headline earnings.
Dippenaar says he and FirstRand co-founders GT Ferreira (71) and Paul Harris (69) have long been looking at how to unlock the discount of between R12bn and R20bn on RMH’s shares. First prize was an unlisted vehicle retaining the anchor shareholding of FirstRand. But would have been too expensive to entice others to join them outside a tradeable exchange.
Once the decision to unbundle was taken, the co-founders’ long-time ally Remgro would follow suit by distributing its own RMH and FirstRand shareholding. For Remgro this made even more sense as its owners laboured under a double discount, an argument easily shared by Ferreira and Harris who serve on the Remgro board. The decision to unbundle was endorsed by yesterday’s 6% jump in the Remgro share price.
Some have described the unbundling as the end of an era. Dippenaar told me that’s too emotional – for him it’s merely the final step in a 10 year journey of converting FirstRand from owner – to professionally – managed. True. But with the anchor shareholder gone, SA’s most valuable bank will suddenly be exposed to potential predators. In a local context, the R385bn market cap sounds gigantic. For global players, at $25bn FirstRand looks to be a snip.
