Oct. 9 (Bloomberg) -- Cie. Financiere Richemont SA investors backed a plan for the company to spin off its British American Tobacco Plc stake and split in two.

Shareholders voted in favor of the split today at a meeting in Geneva, where Richemont, the world's second-biggest luxury- goods maker, is based. The company, controlled by South Africa's billionaire Rupert family, will separate to create a pure luxury business and an investment unit called Reinet.

The family is spinning off the BAT shares before Luxembourg imposes a tax, and is forming Reinet in anticipation of what Richemont Chairman Johann Rupert has said may be ``once-in-a- lifetime'' investment opportunities in the next five years. The Ruperts built Richemont up over two decades by buying watch and jewelry makers with cash from South African tobacco interests.

``It's funny because for many years, everybody said, `Get rid of tobacco, get rid of tobacco, get rid of tobacco,''' he said today in an interview after the meeting. ``Now that we're getting rid of tobacco, they're saying, `Whoa, whoa, whoa, it provides a stable cash flow.' But they understand it's better for all the shareholders.''

The 27 percent stake in London-based BAT, worth 9.1 billion pounds ($16 billion) at yesterday's closing price, is co-owned by Remgro Ltd., another Rupert company. Richemont, the maker of Cartier jewelry and Jaeger-LeCoultre watches, and Remgro gained the stake after merging cigarette maker Rothmans International with the U.K. company in 1999.

Takeover Funds

Richemont is better positioned now to exist without the tobacco business, Rupert said in the interview. The luxury-goods maker has more than 1.1 billion euros ($1.5 billion) of cash, ``more than sufficient for working capital and for acquisitions, should they come in the future,'' he said.

Production constraints that meant Richemont could keep up with only about 60 percent of demand may have ``saved'' the company as demand crumbles, Rupert said at last month's annual meeting last month.

``Maybe we're lucky we did not expand too much in the good times,'' he said today. ``This is a serious contraction.''

Still, Richemont may have opportunities to gain market share because it's more diverse geographically and stronger financially than some competitors, according to Rupert. China and India will have larger middle classes than Europe even if their economic growth rates fall by half in eight to 10 years, the billionaire said.

India, China

``If you believe in long-term cycles, this could be many, many years,'' Rupert said. ``I can't really see that India and China, with their increases in productivity, will not grow. So even though I'm always seen as conservative, I cannot be overly bearish.''

Reinet will invest in any industry other than luxury goods, the chairman said. He's seeking opportunities after the global credit crisis caused world stock indexes to plunge this year, led by financial companies.

In addition to stock in BAT, the maker of Pall Mall cigarettes, Richemont investors will receive shares of Reinet, which will trade in Luxembourg and South Africa. The investment company will hold assets including about 407 million euros ($559 million) of cash, as well as a remaining 3 percent BAT stake to be transferred by Richemont and Remgro, Richemont has said.

Rupert investment companies have delivered positive returns. Shares worth $1 million when it was formed in 1988 would have fetched $20.9 million as of Aug. 6, Richemont said two months ago when it announced the plan. That's an 18 percent annual return, assuming no reinvestment of or earning of interest by dividends.

Remgro stock generated a 17 percent annual return between the company's creation in 1988 and Aug. 6 of this year, according to Richemont.

The luxury-goods maker's stock has dropped 32 percent since Aug. 6, and Remgro is down 5.8 percent.

To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net.

Last Updated: October 9, 2008 07:03 EDT