Rand Merchant Investment Holdings (RMI) says it will list its OUTsurance business in the next six to 12 months.
RMI, which owns 89% of the short-term insurer, said it conducted a detailed country and company analysis to identify potential target investments.
“Currently there are no actionable investment opportunities which meet RMI’s expectations around asset quality, price and availability.”
As a result, it said that the RMI board has concluded that it is in the best interests of shareholders not to continue with its active investment strategy, and has therefore decided to embark on an orderly and managed transition to a structure that represents an effective listing of OUTsurance.
Herman Bosman, chief executive officer, RMI, said: “In many ways, we are pleased to conclude that the best opportunity for RMI’s shareholders in the short-term insurance market lies in our very own, home-grown champion, OUTsurance. It’s logical, in line with our commitment to maximising value, for RMI management to step back and afford shareholders direct access.
“The OUTsurance management team is well-positioned for the future and we look forward to supporting them on this journey as we navigate an orderly and managed transition.”
The announcement of RMI’s portfolio restructure and subsequent sale of its interest in Hastings Group last year has already yielded significant results for shareholders, the group said. The RMI share price has increased 54% during the period.
In line with its policy to return excess free cash, RMI has declared an ordinary and special dividend of R2.54 billion or 165.5 cents per share.
“Transitioning to an effective listing of OUTsurance will facilitate a higher dividend payout ratio and remove holding company costs at RMI. Combined with the unbundling of Discovery and Momentum Metropolitan, RMI will be delivering R36 billion in value to shareholders or R23.48 per share, RMI said.
Marthinus Visser, chief executive officer, OUTsurance, said: “The 24-year partnership with RMI has enabled OUTsurance to establish itself as a large, independent business. Today’s announcement recognises the significant growth opportunity we have at OUTsurance and we’re committed to doing our best to maximise that for the benefit of all our stakeholders.”
The options available in relation to RMI Investment Managers and the AlphaCode portfolio companies are under review. RMI said it is committed to supporting them and their management teams to find the right solution for the future.
The process for a transition to an effective listing of OUTsurance is expected to be implemented over the next 6-12 months. Further details, including the implementation structure, will be announced in time. Further information on the unbundling (expected to conclude before the end of April 2022) will be published in due course, RMI said.