Investec Plc shares up 5% on plans to exit UK-based mortgage business

Posted On Friday, 07 February 2014 12:35 Published by eProp Commercial Property News
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Investec shares shoot up more than 5% after saying operating profit has grown in the nine months to December and it plans to exit its UK-based mortgage business, which it bought just before the subprime crisis.

Stephen Koseff Investec

The financial services group‚ listed in the UK and on the JSE‚ generates more than 60% of operating profits from SA and reports in sterling so its overall group results for the nine months will be negatively affected by the rand's depreciation against the pound over that period.

Nevertheless‚ operating profit before goodwill‚ acquired intangibles‚ non-operating items and taxation had increased 25% on a currency neutral basis compared to the previous year.

The share price of Investec Plc closed 4.40% higher at R74.50 yesterday in response to what RMB Morgan Stanley analyst Greg Saffy called Investec's "solid all-round performance" for the nine months.

Analysts welcomed the news that Investec is "exploring a potential sale" of its UK home loans business‚ Kensington‚ and had "received certain expressions of interest".

Investec bought Kensington for £283m in 2007.

CEO Stephen Koseff said on the release of Investec's interim results to September 2013‚ that the UK business had some £4.8bn in loans "written at the wrong price".

Patrice Rassou‚ head of equities at Sanlam Investment Management‚ said selling the Kensington business would "reduce the potential tail risks and nonperforming loans in the business and allow Investec to optimise its capital structure".

Investec wants to dispose of parts of its Australian business to create a boutique operation focusing on corporate advisory‚ property funds‚ commodity and resource finance‚ project finance‚ corporate and acquisition finance‚ and financial markets.

By the end of March‚ Investec will announce whether it will sell or create a joint venture for the Australian professional finance and asset financing and leasing divisions.

"A clean exit of its Kensington and Australian businesses is seen as an added bonus‚" said Saffy.

Last modified on Friday, 18 April 2014 09:06

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