JOHANNESBURG: RMI is currently the largest shareholder in both companies, owning 25% of Discovery and 27% of Momentum Metropolitan.
Rand Merchant Investment Holdings (RMI) announced earlier today that it will unbundle its shareholding in Discovery and Momentum Metropolitan.
RMI is currently the largest shareholder in both companies, owning 25% of Discovery and 27% of Momentum Metropolitan. Following the unbundling, RMI shareholders will hold shares in these companies directly.
It is seeking to focus more intently on its short-term insurance business and to shrink the discount at which its shares trade.
The RMI board hopes this move will unlock “material shareholder value” by shrinking the discount at which RMI currently trades to its underlying intrinsic value.
The company also intends to issue shares worth R6.5 billion. RMI’s shares jumped 14% to R35.26 in opening trading on Monday.
The unbundling will also establish RMI as a focused property and casualty insurance investment group, “with exposure to, and influence over” unlisted insurers in South Africa, Australia and the UK via OUTsurance, Youi and Hastings. RMI owns 89% of OUTsurance.
Speaking to Talk Radio 702, RMI CEO Herman Bosman said, “[w]e’ve had a fantastic partnership with these two companies… In 1992… We put in R10 million [into Discovery] – a return of 8500 times the market cap today.”
“The market is calling for a sharper focus… We want unlisted, non-competing stocks. Outsurance, of which we own 90%… is amazingly cash-generative. We see great growth potential. We want a network of noncompeting short-term insurers,” he said.
“We want to reduce our debt to R6 billion,” he added.
The unbundling is expected to be completed by the end of the second quarter of 2022.