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OM to unbundle its Nedbank stake worth R10bn

OM to unbundle its Nedbank stake worth R10bn
23-06-21 / Staff Writer

OM to unbundle its Nedbank stake worth R10bn

Johannesburg - The board of directors (“Board”) of Old Mutual is pleased to announce that Old Mutual will, subject to obtaining all requisite regulatory approvals, including Prudential Authority approval, unbundle a portion of its shareholding (“Nedbank Stake”) in the issued ordinary share capital of Nedbank Group Limited (“Nedbank”) to the ordinary shareholders of Old Mutual (“Shareholders”). Old Mutual will unbundle all the Nedbank ordinary shares currently held by Old Mutual Emerging Markets Limited (being 62,131,692 Nedbank ordinary shares and comprising 12.2% of the issued ordinary share capital of Nedbank) to Shareholders by way of a distribution in specie in terms of section 46(1)(a)(ii) of the Companies Act No. 71 of 2008 (the “Unbundling”).

Overview and Rationale of the Unbungling 

Following conclusion of Old Mutual’s managed separation process in 2018, Old Mutual retained a minority shareholding in Nedbank which represents c.19.4% of the Nedbank ordinary shares currently in issue. This level of the Nedbank Stake was determined through discussions with Nedbank and the relevant regulators at the time in order to, amongst other things: 

  • ensure cohesive alignment with the ongoing arms’ length commercial arrangements between Old Mutual and Nedbank; and 
  • support the capital structure of the Old Mutual group (the “Group”), in particular within Old Mutual Life Assurance Company (South Africa) Limited (“OMLACSA”), whilst implementing changes required by the Insurance Act which took effect from 1 July 2018. 

Old Mutual was committed to being a significant minority shareholder of Nedbank (with the right to nominate a director to the boards of Nedbank and Nedbank Limited) whilst retaining a right to review the Nedbank Stake as appropriate from time to time, in accordance with the protocols outlined in the relationship agreement concluded between Nedbank and Old Mutual on 19 April 2018. Following an internal review of the Nedbank Stake, the Board believes that it is in the best interests of Shareholders to dispose of a majority of its Nedbank stake through the Unbundling, as this: 

  • simplifies the Group, allowing investors to focus on the core operations of Old Mutual;
  • allows Shareholders to participate more directly in the differentiated investment cases of Old Mutual and Nedbank; and 
  • provides a substantial return of capital to Shareholders. 

The remaining Nedbank Stake, held by OMLACSA (comprising c.7.2% of the Nedbank ordinary shares currently in issue) continues to support the capital structure of OMLACSA and will be optimally managed in line with the Group’s Financial Management Framework.

Each Shareholder will receive Nedbank ordinary shares (which are listed on the Johannesburg Stock Exchange and the Namibian Stock Exchange) in the ratio illustrated below:

The distribution of Nedbank ordinary shares to Shareholders could result in recipients receiving fractional entitlements to Nedbank ordinary shares. For example, if you hold 100 Old Mutual ordinary shares, you will receive 1 Nedbank ordinary share and a fractional entitlement to 0.31954 of a Nedbank ordinary share. Such fractional entitlements will be sold in the market in accordance with the Listings Requirements of the Johannesburg Stock Exchange, with the proceeds of the sale (“Cash Proceeds”) being paid to the relevant Shareholders. Shareholders on Old Mutual’s Namibian share register, Malawian share register, UK share register and Zimbabwean share register will be paid the local currency cash equivalents of the Cash Proceeds. The Cash Proceeds will be converted to local currency at the effective rate quoted by Old Mutual on or before the date upon which payment of the Cash Proceeds is made to the relevant Shareholders ("Applicable Rate"). 

The Unbundling will be implemented in accordance with the provisions of Old Mutual's memorandum of incorporation.

About Nedbank 

Nedbank is a diversified financial services provider offering a wide range of wholesale and retail banking services, as well as insurance, asset management and wealth management solutions. It delivers its products and services through four main business clusters: (i) Nedbank Corporate and Investment Banking, (ii) Nedbank Retail and Business Banking, (iii) Nedbank Wealth and (iv) Nedbank Africa Regions. Nedbank ranks as a top-5 bank by capital on the African continent and Ecobank Transnational Incorporated (Ecobank), in which Nedbank holds a 21% shareholding, ranks within the top-10 banks by assets on the African continent. 

Nedbank is South Africa's fifth-largest bank by market capitalisation and fourth largest by total assets and headline earnings. It is a leading corporate bank and a market leader in commercial property and renewable energy finance and has a strong position in household motor finance, household deposits and card acquiring. It operates a unique asset management model as part of an integrated wealth management business. Through its pan-African banking alliance with Ecobank, Nedbank provides its customers access to Africa's widest banking network. For further information on Nedbank, Shareholders are referred to Nedbank's public disclosures. Nedbank’s public disclosures are not part of this announcement and are not incorporated by reference herein.

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