Investec Gains Most Since April 2009 After Earnings Increaseby
U.K. market better, South Africa strong despite economy
Bank sets up vehicle for investments in industrial companies
Investec Plc’s Johannesburg-traded shares advanced the most in more than 6 1/2 years after the company, which owns a lender and money manager in South Africa and the U.K., said fiscal first-half profit rose 15 percent.
Investec climbed 6.9 percent to 117 rand by the close, the biggest gain since April 2, 2009. The stock has added 20 percent this year compared with the 0.5 percent slump in the six-member FTSE/JSE Africa Banks Index. The London stock advanced 6.6 percent.
Net income increased to 194.6 million pounds ($297 million) in the six months ended Sept. 30 from 169 million pounds a year earlier, helped by improved performances from banking units in both countries, Investec said in a statement on Thursday. Diluted earnings per share excluding one-time items rose 20 percent to 20 pence. The dividend was 12 percent higher at 9.5 pence a share.
Investec’s private banking units attracted more clients in the first half, boosting transaction fees, while investment income rose. The U.K. market showed “sustained improvement” and South Africa produced strong growth in loans and client activity, even with weakness in the economy.
“The results were above expectations, up 19 percent on a currency-neutral basis and even stronger in rand,” said Patrice Rassou, head of equities at Sanlam Ltd.’s investment-management unit in Cape Town. “Operationally, Investec is doing well and, with bad debts reducing, it has wind in the sail. We also saw good inflows in the asset management and wealth businesses. Strategically, the repositioning is bearing fruit.”
The company has set up a new unit, Investec Equity Partners, which will hold stakes in South African industrial companies, Chief Executive Officer Stephen Koseff said on a conference call. London- and Johannesburg-based Investec will transfer the company stakes and staff from Investec Principal Investments to IEP, which will be led by Andy Leith as its executive chairman.
The unit will raise 10 billion rand ($708 million) in equity and debt capital to help grow the companies it houses and buy stakes in other businesses, Investec said. As the assets housed in IEP aren’t strategic for the bank and are better placed with partners, Investec will hold a 45 percent stake in the unit and investors the rest, Koseff said.