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Investec to spin out asset management arm after strategic review

Investec investors are set to receive shares in the asset manager
IAM will list in London

South African bank Investec PLC (LON:INVP) is to demerge its asset management arm IAM as a separate company to be listed in London.

IAM has £109bn of assets under management and has grown at an annual rate of 13.7% over the last ten years, but a strategic review concluded being independent would accelerate its growth and help it attract staff.

In a trading update, Investec reported asset management had performed better than expected in the six months to September, as had specialist banking, but wealth management had been weak.

Loan balances over the group dropped 5.5% to £23.7bn while funds under management rose 4% to £167bn (IAM plus Wealth) with net inflows of £5.0bn.

Overall, Investec said group revenue is expected to be modestly ahead and costs higher than expected due to extra staff to cover regulatory requirements and expansion.

IAM most similar to Schroders

According to Numis, IAM is probably most similar to Schroders of the UK-listed Asset Managers, but with more of an Africa bias.

Long-term performance is good and net flows have been consistently strong.

Investec has built this business organically from scratch, creating a substantial amount of shareholder value along the way added the broker.

Joint chief executives

Fani Titi and Hendrik du Toit will become joint chief executives of the demerged IAM.

In a statement, they said the demerger simplifies the group’s structure and will bolster its long-term future.

IAM will now work on the mechanics of the delisting, with Investec Group shareholders to receive shares in IAM.

The management stake in IAM will be retained with Investec also likely to keep a minority stake.

Following the demerger, Investec will comprise the wealth management and speciality banking divisions.

Shares in Investec rose by 12% to 542p.

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