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Investec latest to bank on fund arm flotation

It's a name known to millions for its past sponsorship of Test cricket, its current sponsorship of The Derby and its famous zebra mascot.
Today, though, the South African bank Investec is attracting attention due to an unexpected decision to spin off its fund management arm.
Investec, a member of the FTSE 100 until December 2011, plans to float Investec Asset Management (IAM) as a separate company on the London stock exchange.The news has been welcomed by investors and shares of the bank have shot up by almost 10%.IAM, which currently contributes just under a quarter of group profits, will be a substantial business in its own right. It has €109bn under management and growth has been particularly strong in recent years.The move represents the continuation of a trend. French bank Societe Generale and Germany's Deutsche Bank have both demerged their fund management arms in recent years while the Prudential is in the process of demerging M&G.
Investec latest to bank on fund arm flotation

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Deutsche is among banks to have spun off its asset management operation
Investec is one of a wave of South African companies to have floated in London since the end of apartheid and the country's international isolation.Many of them, once given access to the bigger pools of capital available in the London stock market, have showcased the entrepreneurial flair of and managerial talent of a number of South African business leaders.The most spectacular examples are Meyer Kahn and the late Graham Mackay who, having floated South African Breweries in London in 1999, built a company little known outside its homeland into the world's second-largest brewer.Others include Sir Mick Davis, nicknamed "Mick the Miner", who built Xstrata into one of the world's biggest mining firms until its €39.1bn takeover by Glencore in 2012.
Investec latest to bank on fund arm flotation

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Former Xstrata boss Sir Mick Davis
Investec has shown similar entrepreneurial zeal. Formed in 1974 as a small leasing company, it floated in Johannesburg in 1986, making its first move outside South Africa in 1992 with the acquisition of London-based Allied Trust bank in 1992.More UK acquisitions followed over the years, including the money broker Clive in 1995 and the stockbroker and investment adviser Carr Sheppards the following year.
The deal that really put the bank on the map in the City, though, came in 1998 with a series of deals that saw it acquire some of the most storied names in the Square Mile, including the fund manager Guinness Flight Hambro, the stockbroker Henderson Crosthwaite and the wealth management and private banking business Guinness Mahon.The company moved its primary stock market listing from Johannesburg to London in July 2002 in the midst of a slump that had deterred a number of other businesses from floating.Anyone who braved the conditions and bought the shares at the time of their London listing will have done well if they have held on to them.Investec was valued at €767m at the flotation. Its market capitalisation today stands at €4.93bn.Friday's news, which ironically comes weeks after Old Mutual - another South African financial services group and former FTSE-100 member - completed its break-up will mark the end of an era in more ways than one.Stephen Koseff, the current chief executive and Bernard Kantor, currently the managing director, will be stepping down after 38 years with the bank, although both will remain as directors.According to the bank, the logic behind the demerger is that IAM will do better standing on its own two feet, since it will have the freedom to expand at its own pace and without having to take into consideration the capital needs of the wider group.Or, as Hendrik du Toit, who will be chief executive of IAM once it is listed, put it this morning: "If you want to play in the super league in asset management, independence wins."
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That is assuming, of course, that the business makes it to market.There is already speculation in the Square Mile that Investec's announcement will prompt rivals into seeking to buy IAM prior to an IPO.
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