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Johannesburg-listed Rand Merchant Investment (RMI) Holdings has announced plans to unbundle its stakes in two major local insurers — Discovery Limited and Momentum Metropolitan Holdings — and carry out a rights issue,* Reuters reported.
The move is aimed at enabling it to narrow a discount between its share price and the book value (the initial value at which the share was traded).
Like some other companies, RMI Holdings owns stakes in other publicly listed firms, which often leads to their shares trading at a discount to their book value.
The move will help to “unlock material shareholder value through a reduction in the discount at which RMI currently trades to its underlying intrinsic value,” RMI said.
The unbundling will further establish RMI Holdings as a property- and casualty-focused insurance investment group, “with exposure to, and influence over,” unlisted insurers in some of its markets through its subsidiaries OUTsurance, Youi Insurance and Hastings Direct.
Local news also reported RMI Holdings as saying that it received support in principle from investors who hold 65 percent of the company, including from its largest shareholders Remgro (28.2 percent), Royal Bafokeng (15 percent), the founders of RMB Group, Coronation Fund Managers, Allan Gray Investment and Abax Investment.
Rand Merchant Investment Holdings
RMI Holdings is a South Africa-based financial services investment holding company that holds various insurance brands in South Africa, Australia, China, Mauritius, New Zealand, Republic of Ireland, Singapore, the UK and the United States.
RMI Holdings was incorporated and registered in South Africa on March 24, 2010, as a wholly-owned subsidiary of Rand Merchant Bank Holdings, founded by Laurie Dippenaar, Paul Harris, Gerrit Thomas “GT” Ferreira and Pat Goss.
Ferreira is a South African businessman and banker who is a non-executive chairman of RMI Holdings. He is also one of the co-founders of Firstrand Bank in South Africa. The multimillionaire makes the majority of his wealth from his shares in RMI Holdings and RMB Holdings.
As of 2015, Forbes rated him among the 50 richest Africans, with a $450 million net worth.
*A rights issue (rights offer) is a dividend of subscription rights to buy additional securities in a company made to the company’s existing security holders.
