REG - Investec PLC - Update on Ninety One Distribution Proposals

InvestecAnnouncement

21/02/2022 07:00

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RNS Number : 2075C  Investec PLC  21 February 2022

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FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF THAT JURISDICTION.

 

THIS ANNOUNCEMENT CONCERNS MATTERS WHICH MAY AFFECT THE LEGAL RIGHTS OF
INVESTEC SHAREHOLDERS. IF YOU ARE IN ANY DOUBT ABOUT THE CONTENTS OF THIS
ANNOUNCEMENT OR WHAT ACTION YOU SHOULD TAKE, YOU ARE RECOMMENDED TO SEEK YOUR
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AUTHORISED ADVISER.

 

21 February 2022

 

 Investec Limited                               Investec plc

 Incorporated in the Republic of South Africa   Incorporated in England and Wales

 Registration number 1925/002833/06             Registration number 3633621

 JSE share code: INL                            LSE share code: INVP

 NSX share code: IVD                            JSE share code: INP

 BSE share code: INVESTEC                       ISIN: GB00B17BBQ50

 ISIN: ZAE000081949                             LEI: 2138007Z3U5GWDN3MY22

 LEI: 213800CU7SM6O4UWOZ70

 

As part of the dual-listed company structure, Investec plc and Investec
Limited (together, "Investec") notify both the London Stock Exchange ("LSE")
and the Johannesburg Stock Exchange ("JSE") of matters which are required to
be disclosed under the Disclosure Guidance and Transparency Rules and Listing
Rules of the Financial Conduct Authority and/or JSE Listings Requirements.

 

Update on Ninety One Distribution Proposals

Further to the announcement by Investec on 18 November 2021 relating to the
proposed distribution (the "Distribution") of 15% of the shares in the Ninety
One dual-listed company structure comprising Ninety One plc and Ninety One
Limited (together, "Ninety One") to Investec shareholders, Investec today
announces further details of the proposals related to the Distribution (the
"Proposals").

 

Proposals for the Distribution

It is intended that the Distribution will be implemented by means of:

I.      a reduction and repayment of capital by Investec plc which will
be satisfied by the transfer of Ninety One plc ordinary shares ("Ninety One
plc Shares") on a pro rata basis to Investec plc shareholders holding ordinary
shares on Investec plc's principal register of shareholders in the United
Kingdom ("Investec plc UK Register Shareholders"); and

II.     a distribution in specie by Investec Limited of Ninety One Limited
ordinary shares ("Ninety One Limited Shares") on a pro rata basis to:

a.     Investec plc shareholders holding ordinary shares on Investec plc's
South African branch register of shareholders in South Africa ("Investec plc
SA Register Shareholders") via the dividend access redeemable preference share
in Investec Limited (the "Dividend Access Share"); and

b.     Investec Limited shareholders holding ordinary shares on Investec
Limited's register of shareholders ("Investec Limited Shareholders").

 

Investec plc UK Register Shareholders will receive Ninety One plc Shares,
whilst Investec plc SA Register Shareholders and Investec Limited Shareholders
will receive Ninety One Limited Shares. The number of Ninety One shares each
Investec shareholder is entitled to receive in respect of each Investec share
held (which will be the same for all Investec plc UK Register Shareholders,
Investec plc SA Register Shareholders and Investec Limited Shareholders) is
expected to be confirmed in a separate announcement to be released on or
around

18 March 2022. The Ninety One plc Shares are admitted to the premium listing
segment of the UK Official List and to trading on the LSE's main market for
listed securities, with a secondary inward listing on the main board of the
JSE. The Ninety One Limited Shares have a primary listing and are admitted to
trading on the main board of the JSE. By virtue of the dual listed company
structure, both the Ninety One plc Shares and the Ninety One Limited Shares
carry the same economic and voting rights in Ninety One.

 

Background to the Proposals

As set out in the announcement on 18 November 2021, given Investec's strong
capital generation and capital optimisation strategy, Investec intends to
distribute a 15% holding in Ninety One to shareholders whilst retaining an
approximate 10% interest. Investec has considered a number of different ways
of effecting the Distribution. For capital optimisation reasons, it is
beneficial for the retained 10% shareholding in Ninety One to be held by
Investec plc.

 

On this basis, and given the number of Ninety One shares held by each of
Investec plc and Investec Limited, together with the complexities involved in
transferring such shares between the two entities, Investec has reached the
conclusion that under the Proposals Investec plc SA Register Shareholders
should receive Ninety One Limited Shares from Investec Limited, rather than
Ninety One plc Shares from Investec plc.

 

The Proposals are structured as a return of capital by Investec plc to
Investec plc UK Register Shareholders, and a distribution in specie by
Investec Limited to Investec plc SA Register Shareholders (via the Dividend
Access Share) and to Investec Limited Shareholders. The proposed approach
takes into account the various tax implications for Investec shareholders and
for Investec from a UK and South African tax perspective, as well as the
commercial objectives for the transaction. Brief details of the tax
considerations for certain Investec shareholders are set out below.

 

UK Scheme of Arrangement

Investec has been advised that the Proposals, in so far as they relate to
Investec plc ordinary shareholders, comprising both Investec plc UK Register
Shareholders and Investec plc SA Register Shareholders (the "Investec plc
Shareholders") should be effected pursuant to a UK scheme of arrangement
between Investec plc and the Investec plc Shareholders under the UK Companies
Act 2006 (the "Scheme"). The purpose of the Scheme will be to effect the
distribution of shares in Ninety One to Investec plc Shareholders. The
repayment of capital to be satisfied by the transfer of Ninety One plc Shares
to Investec plc UK Register Shareholders will be effected upon a UK reduction
of capital, of Investec plc's share premium account, under the UK Companies
Act 2006, which will form part of the Scheme. Investec Limited will also
undertake to be bound by the Scheme, which will provide for the distribution
in specie by Investec Limited of Ninety One Limited Shares to Investec plc SA
Register Shareholders via the Dividend Access Share.

 

If Investec plc Shareholders have any questions in relation to the Scheme or
the contents of this announcement, they should contact Investec via
investorrelations@investec.co.za or by telephone on +27 11 286 7070.

 

Approval of UK Scheme of Arrangement

Under the provisions of the UK Companies Act 2006, the Scheme must be approved
by a majority in number, representing 75% by value, of Investec plc
Shareholders (or of each class of Investec plc Shareholders) present and
voting at a shareholder meeting convened with the permission of the High Court
of Justice in England and Wales (the "Court").

 

Investec plc proposes to apply to the Court to seek an order giving it
permission to convene a single meeting of all of the Investec plc Shareholders
(the "Court Meeting") for the purpose of considering and, if thought fit,
approving the Scheme. At the Court hearing at which the application for such
an order will be heard (the "Convening Hearing"), it will be determined
whether, for the purposes of voting at the Court Meeting, the Investec plc UK
Register Shareholders and the Investec plc SA Register Shareholders should be
treated as a single class (in which case Investec plc UK Register Shareholders
and Investec plc SA Register Shareholders would vote together in one meeting)
or as separate classes (in which case the two classes would vote on the Scheme
separately).

 

Investec has considered the rights of the Investec plc UK Register
Shareholders and Investec plc SA Register Shareholders, in their capacity as
Investec plc Shareholders, and the different treatment of the Investec plc UK
Register Shareholders and Investec plc SA Register Shareholders under the
Scheme in relation to the receipt of Ninety One plc Shares and Ninety One
Limited Shares respectively. Notwithstanding that difference and by virtue of
the dual-listed company structure, each Investec plc Shareholder will receive
as a matter of economic substance the same consideration under the Scheme.

 

Accordingly, Investec plc intends to ask the Court to treat the Investec plc
UK Register Shareholders and Investec plc SA Register Shareholders as a single
class for the purposes of the Scheme, so that all Investec plc Shareholders
will be able to vote together at the Court Meeting.

 

If any Investec plc Shareholder wishes to object to Investec's proposals as to
voting at the Court Meeting, or to raise any other issue in relation to the
Court Meeting or the conduct of such meeting, they may attend the Convening
Hearing in order to do so. The Convening Hearing is expected to be heard
before a High Court Judge in the High Court, London on 15 March 2022. The time
of the hearing will be set out on the HM Courts & Tribunals Service's
website at www.justice.gov.uk/courts/court-lists
(http://www.justice.gov.uk/courts/court-lists) .

 

Investec plc Shareholders have the right to attend in person or through
counsel and make representations at the Convening Hearing, which is expected
to be conducted by electronic means. If an Investec plc Shareholder wishes to
attend or make representations at the Convening Hearing, they can register
their interest in advance with Investec via investorrelations@investec.co.za
or by telephone on +27 11 286 7070, and Investec will provide further details
of the time of the hearing and how to attend once this information is made
available by the Court. Alternatively, Investec plc Shareholders can contact
the Court's listing office via chanceryjudgeslisting@justice.gov.uk. Investec
plc Shareholders will also be entitled to attend and make representations in
the same way at the final Court hearing to sanction the Scheme and further
details of such hearing will be made available in due course.

 

Tax considerations

The following is a general summary of certain material UK and South African
tax considerations for certain categories of Investec shareholders relating to
the Distribution. The summary is based on current UK and South African tax law
as applied in England and Wales

and South Africa respectively and what is understood to be the practice of the
relevant tax authorities (which may not be binding on them) as at the date of
this announcement, all of which are subject to change, possibly with
retrospective effect. It is intended as a general and non-exhaustive guide to
certain UK and South African tax consequences of the Distribution, and applies
only to (i) Investec plc UK Register Shareholders resident and, in the case of
an individual, domiciled or deemed domiciled for tax purposes in the UK and to
whom "split year" treatment does not apply, and (ii) Investec shareholders
resident for tax purposes solely in South Africa, who in each case hold
Investec shares as an investment and who are, or are treated as, the absolute
beneficial owners of such shares. The summary does not address all possible
tax consequences relating to the Distribution. Certain categories of Investec
shareholders, including those carrying on certain financial activities, those
subject to specific tax regimes or benefiting from certain reliefs or
exemptions, those connected with Investec or the Investec group and those for
whom their Investec shares are employment related securities, may be subject
to special rules and the summary does not apply to such shareholders.

 

The summary does not constitute legal or tax advice. Investec shareholders who
are in any doubt as to their tax position, or who are resident or otherwise
subject to taxation in a jurisdiction outside the UK and/or South Africa,
should consult their own professional advisers immediately.

 

Investec plc UK Register Shareholders

It is expected that Investec plc UK Register Shareholders within the charge to
UK capital gains tax (or UK corporation tax on chargeable gains) will be
treated as having made a part disposal of their shares in Investec plc (with
their base cost apportioned between their retained Investec plc shares and the
Ninety One shares they receive). Any gain (comprising broadly the difference
between the value of the Ninety One shares received and the relevant portion
of their base cost) will be subject to UK tax depending on the shareholder's
individual circumstances (including the availability of any exemption or
relief). However, where the Ninety One shares received are worth £3,000 or
less (and the shareholder has a base cost in their Investec plc shares equal
to at least the value of the Ninety One shares received), no tax will be
payable and instead the value of the Ninety One shares received will be
deducted from the base cost of their Investec plc shares.

 

The distribution of Ninety One plc Shares to South African tax resident
Investec plc UK Register Shareholders will be treated as a foreign return of
capital. Where such shareholders hold their shares as capital assets, the base
cost in their Investec plc shares will be reduced by an amount equal to the
market value of the Ninety One plc Shares received. South African capital
gains tax will then only be payable by such shareholders if and to the extent
that the market value of the Ninety One plc Shares received exceeds the
shareholder's existing base cost in their Investec plc shares.

 

Investec plc SA Register Shareholders

Investec is seeking a ruling from the South African Revenue Service that South
African unbundling relief, as contemplated under the South African Income Tax
Act, No. 58 of 1962 ("Unbundling Relief"), is applicable to the distribution
in specie by Investec Limited of Ninety One Limited Shares to Investec plc SA
Register Shareholders via the Dividend Access Share (as well as the
distribution in specie to Investec Limited Shareholders). If such Unbundling
Relief is obtained, subject to limited exceptions, there will be no immediate
tax charge for South African tax resident Investec plc SA Register
Shareholders on receipt of their Ninety One Limited Shares, although they will
not have a base cost in the Ninety One Limited Shares they receive for capital
gains tax purposes going forward.

 

If such Unbundling Relief is not available, South African tax resident
Investec plc SA Register Shareholders which are individuals or trusts will
generally be subject to South African dividend withholding tax on the value of
the Ninety One shares they receive. The shareholders will have a base cost in
the Ninety One Limited Shares they receive equal to the market value of such
shares on the date of distribution.

 

Investec Limited Shareholders

As explained above, Investec is seeking a ruling from the South African
Revenue Service that South African Unbundling Relief is applicable to the
distribution in specie by Investec Limited of Ninety One Limited Shares to
Investec Limited Shareholders (as well as to Investec plc SA Register
Shareholders via the Dividend Access Share). If such Unbundling Relief is
obtained, subject to limited exceptions, there will be no immediate tax charge
for South African tax resident Investec Limited Shareholders on receipt of
their Ninety One Limited Shares (with their base cost apportioned between
their retained Investec Limited Shares and the Ninety One shares they
receive).

 

 If such Unbundling Relief is not available, it is expected that Investec
Limited Shareholders may be subject to South African capital gains tax and the
distribution in specie will be treated as a return of capital, and the base
cost in their shares in Investec Limited will be reduced by an amount equal to
the market value of the Ninety One Limited Shares received. South African
capital gains tax will then only be payable by such shareholders if and to the
extent that the market value of the Ninety One Limited Shares received exceeds
the shareholder's existing base cost in their Investec Limited Shares.

 

Further details to be made available

In the event that the Court makes the order giving permission to convene the
Court Meeting, further details on the implementation of the Proposals,
including the expected timetable of principal events, action to be taken by
Investec shareholders, the number of Ninety One shares each Investec
shareholder is entitled to receive in respect of each Investec share held and
further details of the proposed Scheme, will be made available on or around 18
March 2022. The Distribution remains subject to a number of conditions,
including the approval of the Investec shareholders, and the sanction of the
Scheme, and confirmation of the associated reduction of capital, by the Court.

 

Enquiries:

Mr David Miller

Investec plc

Company Secretary

Tel: + 44 (0)20 7597 4000

 

FORWARD-LOOKING STATEMENTS

This announcement contains forward-looking statements with respect to certain
of Investec plc's and Investec Limited's plans and expectations relating to
the Distribution. By their nature, all forward-looking statements involve risk
and uncertainty because they relate to future events and circumstances which
are beyond Investec plc's and Investec Limited's control. These
forward-looking statements speak only as of the date on which they are made.
Investec plc and Investec Limited expressly disclaim any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements contained in this announcement or any other
forward-looking statements they may make.

 

IMPORTANT INFORMATION

The Ninety One shares to be distributed in connection with the Proposals have
not been, and will not be, registered under the US Securities Act or the
securities laws of any state or other jurisdiction of the United States and
may not be offered, sold, exercised, transferred or delivered, directly or
indirectly, in or into the United States at any time except pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the US Securities Act and applicable state and other
securities laws of the United States. The Ninety One plc Shares to be
distributed in connection with the Scheme will be distributed in reliance upon
the exemption from the registration requirements of the US Securities Act
provided by section 3(a (10) thereunder. For the purposes of qualifying for
the exemption from the registration requirements of the US Securities Act
pursuant to section 3(a) (10) thereunder, Investec will advise the Court
through counsel that its sanctioning of the Scheme will be relied upon by
Investec as an approval of the Scheme following a hearing on its fairness to
Investec shareholders, at which hearing all Investec plc Shareholders are
entitled to attend in person or through counsel to support or

oppose the sanctioning of the Scheme and with respect to which notification
has been given to all Investec plc Shareholders.

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