Investec Plc, the owner of a bank and money manager in South Africa and the U.K., said senior employees of its asset-management unit will buy a 15 percent stake in the operation for 180 million pounds ($269 million).
The buyers, led by Investec Asset Management Chief Executive Officer Hendrik du Toit and comprising about 40 senior managers and employees, have an option to acquire another 5 percent over the next seven years, the Johannesburg- and London-based company said in a statement today.
“Investec and Investec Asset Management strongly believe that institutional clients are attracted to asset management companies that have significant operational independence and alignment of incentive structures to long-term performance,” the company said in the statement.
Investec Asset Management, with offices in Cape Town and London, has 69 billion pounds in assets under management. While Investec’s banking operations have been affected by the European debt crisis, the U.K. recession and rand weakness, the asset management unit has recorded net inflows and 12 percent growth since March last year.
“This transaction implies a 1.2 billion-pound valuation for Investec Asset Management, well below our 1.9 billion-pound fair value,” Greg Saffy, Johannesburg-based analyst for RMB Morgan Stanley, said in an e-mailed response to questions. At the same time it “solidifies” management’s stake in the unit “which we rate highly,” he said.
Half the funding will be raised through equity and half through debt, the company said. The buyers will finance the equity investment with cash, deferred bonuses, long-term incentive awards and borrowing. Investec Asset Management will pay Investec a special dividend of about 60 million pounds, the company said in the statement.
Investec declined 0.4 percent to 68.80 rand at the close in Johannesburg, giving the company a market value of 61.5 billion rand ($6.7 billion).
The sale of the asset management stake will be beneficial, according to Patrice Rassou, head of equities at Sanlam Investment Management in Cape Town. “It’s good to lock in the key staff, they are the key assets of the company.”