South Africa: Old Mutual Investors to Share R10 Billion Windfall After Insurance Group Unbundles Nedbank Stake

analysis

Old Mutual's results for the year to March 2021 may have been hamstrung by the pandemic and economy, but still, the company saw fit to deliver a 35c dividend from strong capital reserves. Now shareholders have something else to smile about.

Old Mutual shareholders have seen more share price action in the past day than they have in the past year.

The share surged by 8% to R13.96 following the news that the investment and insurance group planned to unbundle most of its remaining 19.4% stake in Nedbank to shareholders.

This means that an unexpected windfall of R10-billion will be unbundled to about 450,000 shareholders at a ratio of 1.3 Nedbank shares for every 100 Old Mutual shares held.

This step follows the conclusion of Old Mutual's managed separation process of 2018 which, among other steps, saw it reduce its stake in Nedbank from over 50%.

This minority relationship was sufficient to ensure the two companies could maintain their commercial relationships, support the capital structure of the Old Mutual Group and ensure that Old Mutual had a seat on the Nedbank board.

However, life has changed considerably since those days, not least of which was...

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