RMH to Spin Off FirstRand Stake After Market Turmoil Hits Shares

JOHANNESBURG (Capital Markets in Africa) — RMB Holdings Ltd. will spin off its stake in Africa’s biggest banking group by market value even after turmoil in global stock markets caused the shares of both companies to plunge.

The unbundling of FirstRand Ltd. to RMH’s shareholders will unlock 5.4 billion rand ($300 million) in value for investors of the holding company, who will now directly own equity in the banking group, Johannesburg-based RMH said in a statement on Tuesday. Since the transaction was first announced in November, shares of FirstRand have slumped 39%, while those of RMH tumbled 36%.

“The RMH board has carefully considered the unprecedented market conditions resulting from the Covid-19 pandemic, as well as a weakening South Africa macro-economic environment,” the company said. The board believes that the structure of the deal means it is still in the “best interests of shareholders and other stakeholders” for it to continue.

Billionaire Johann Rupert’s Remgro Ltd. will also distribute all its RMH shares, it said in a separate statement.

After finalizing the unbundling, RMH will remain listed on the Johannesburg Stock Exchange with RMH Property as its sole remaining asset. The spinoff ends a 27-year tie-up between RMH and FirstRand and is aimed at narrowing the discount at which RMH’s shares trade relative to the value of its underlying assets.

RMH and Rand Merchant Investment Holdings are also forming a joint Covid-19 support fund to aid early-stage financial services businesses, with contributions from senior management and the boards, it said.

Source: Bloomberg Business News