Billionaire-Backed RMI to Shake Up South Africa Insurer Group
Rand Merchant Investment Holdings Ltd. will divest from insurers Discovery Ltd. and Momentum Metropolitan Holdings Ltd. as part of a wider restructuring of the South African investment group.
The firm is planning a rights issue of as much as 6.5 billion rand ($440 million) to facilitate the move, according to a Monday statement. The proceeds will be used to pay down debt and are required for the two exits to proceed, Chief Executive Officer Herman Bosman said in an interview.
RMI holds 25% in Discovery and 27.3% of Momentum and is the biggest investor in both groups. The firm now wants to refocus on the property and casual insurance sector and expand outside of its domestic market, requiring a shakeup of its portfolio.
The firm will redistribute the stock to its shareholders, which include Remgro Ltd., partly owned by South Africa’s richest man Johann Rupert.
RMI shares gained as much as 18% in Johannesburg, the most in almost six years. The traded 15% higher as of 11:35 a.m., valuing the company at 54.5 billion rand ($3.7 billion).
“Investment holding companies have traded at a discount since about 2016,” said Bosman. “The fact that shareholders will have direct holdings provides efficiency, so there are no discounts.”
The move will see the investment firm concentrate on other assets such as closely held South African insurer Outsurance, of which it owns 90%, and the U.K.’s Hastings Group Holding Plc, which it bought alongside Finland’s Sampo Oyj for about $2.2 billion last year.
“We want to have businesses where we really have meaningful stakes, in order for us to be agile and flexible,” Bosman said. RMI is being advised by Bank of America Corp. on the process, and expects to complete the unbundlings by April, Bosman said.