PSG Group will distribute nearly 32.5 million of its shares to its shareholders in Capitec Bank at an attributable value of ZAR125.48 ($7.23) per share

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PSG Group to unbundle nearly 32.5 million of its shares in Capitec Bank. (Credit: aymane jdidi from Pixabay)

PSG Group said that it will unbundle nearly 28.11% of its stake in South African retail bank Capitec Bank to its shareholders.

The South African investment holding company in this regard plans to distribute nearly 32.5 million of its shares to its shareholders in the retail bank at an attributable value of ZAR125.48 ($7.23) per share.

The offloading of the shares will be done through a pro-rata distribution in specie, in the ratio of 14 Capitec Bank’s shares for every 100 PSG Group Shares held on the PSG Group unbundling record date.

Recently, the investment holding firm informed its shareholders that its board of directors is in the process of investigating, and seriously looking into the potential unbundling of some or all of the group’s shareholding in Capitec Bank.

Why PSG Group wants to unbundle its shares in Capitec Bank

The investment holding firm stated: “The rationale for the PSG Group Unbundling is to ease the administrative and regulatory compliance burden that would otherwise be imposed on PSG Group, should PSG Group be classified in terms of the FSRA as belonging to a financial conglomerate, as a result of its shareholding in Capitec, and to avoid the resulting restrictions that could impact on PSG Group’s ability to operate as a dynamic and nimble investment holding company.”

The group also expects the unbundling of the shares to help reduce the discount at which PSG Group Shares trade to the company’s sum-of-the-parts (SOTP) value and to unlock value for its shareholders.

Following the unbundling process, PSG Group will retain a stake of 4.3% in Capitec Bank, which will be held by PSG Financial Services, its fully-owned subsidiary.

Capitec Bank, which is headquartered in Stellenbosch, Western Cape, has more than 800 branches across South Africa with close to 10 million active clients. Established in 2001, the South African retail bank employs more than 13,000 people.

In late 2019, the bank acquired Mercantile Bank, a South African commercial bank, from Portuguese banking company Caixa for about ZAR3.56bn ($205m).