South African banking group FirstRand plans to reduce its stake in health insurer Discovery Holdings, giving its shareholders a direct stake in the company, it said on Tuesday.
The unbundling, for which FirstRand will seek shareholder approval, will improve Discovery shares’ liquidity on the Johannesburg bourse, FirstRand said in a statement.
It expects to implement the unbundling in November this year.
It said the new ownership structure should raise Discovery’s flexibility and help it to expand into investment and other financial services products currently provided by its parent.
FirstRand has a 57% majority stake in Discovery.
FirstRand said that to follow rights under a claw-back offer dating back to 2003, it secured loan funding of around R553-million and planned to sell enough Discovery shares prior to the unbundling to settle this liability in full.
The banking group said Discovery executives wanted to increase their shareholding in their own company, and the offer would enable them to do so.
FirstRand shares were up 1,37% at R23,72 at 9.21am GMT, while Discovery stock was down 0,93% at R26,75. – Reuters