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Old Mutual "Nedbank Unbundling"

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carioca
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Old Mutual "Nedbank Unbundling"

#172303

Postby carioca » October 8th, 2018, 4:29 pm

As an Old Mutual shareholder I received, some days ago, a communication from my broker concerning the imminent distribution of Nedbank shares. It states there that these shares will be traded exclusively on the Johannesburg stock exchange, end the message shows what fees my broker will charge for trading in them. (minimum of £75 per trade; Annual Custody Charge: £30 per line of stock)
I know next to nothing about Nedbank, and my initial reaction was to get rid of my OML shares before I get stuck with Nedbank shares, and consider the possibility of buying back OML shares and/or topping up my Quilter position after the unbundling has been completed. I had expected to find comments on this topic in this forum, but no such luck.

So, my questions is:
Is there any good reason for hanging on to Old Mutual and receiving Nedbank shares, even though it will cost a lot if/when I decide to sell them?

carioca

Alaric
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Re: Old Mutual "Nedbank Unbundling"

#172314

Postby Alaric » October 8th, 2018, 5:41 pm

carioca wrote:Is there any good reason for hanging on to Old Mutual and receiving Nedbank shares, even though it will cost a lot if/when I decide to sell them?


Reading the small print, the distribution is something like 3 Nedbank shares for every 100 Old Mutual shares and that Nedbank will be making an offer to buy out all their new shareholders with less than 100 shares. So it may not be expensive to get rid of the Nedbank shares. You would hope so too, otherwise the disposal of Nedbank by Old Mutual wasn't in the interests of smaller shareholders.

https://www.oldmutual.com/docs/default- ... b6994c55_4

My holding is with ii, who so far have been silent on future trading of Nedbank.

carioca
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Re: Old Mutual "Nedbank Unbundling"

#172340

Postby carioca » October 8th, 2018, 7:49 pm

Thanks for your input, Alaric.

My holding is 5500 OML shares. 3 x 55 will take me over the 100 shares mark.
I guess I'll better place that sell order before it's too late.

Gengulphus
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Re: Old Mutual "Nedbank Unbundling"

#172462

Postby Gengulphus » October 9th, 2018, 9:28 am

Alaric wrote:
carioca wrote:Is there any good reason for hanging on to Old Mutual and receiving Nedbank shares, even though it will cost a lot if/when I decide to sell them?

Reading the small print, the distribution is something like 3 Nedbank shares for every 100 Old Mutual shares and that Nedbank will be making an offer to buy out all their new shareholders with less than 100 shares. So it may not be expensive to get rid of the Nedbank shares. You would hope so too, otherwise the disposal of Nedbank by Old Mutual wasn't in the interests of smaller shareholders.

https://www.oldmutual.com/docs/default- ... b6994c55_4

My holding is with ii, who so far have been silent on future trading of Nedbank.

For anyone else holding, what the document says about that offer is:

"Nedbank odd-lot offer

Old Mutual Shareholders are referred to the announcement published by Nedbank on SENS on Wednesday, 26 September 2018 simultaneously with the release of this announcement by Old Mutual. Nedbank has indicated its intention to consider implementing an odd-lot offer following the Nedbank Unbundling and as soon as practicably possible, subject to market conditions and all requisite approvals and in accordance with JSE Listings Requirements, to all eligible Nedbank shareholders holding less than 100 Nedbank Shares, in order to enable these Nedbank shareholders to more efficiently dispose of their odd lot holdings should they so wish and to manage the expanded nature of the Nedbank SA Register and the Nedbank Namibian Register following the implementation of the Nedbank Unbundling.

Old Mutual Shareholders holding less than 100 Nedbank Shares are advised that, in the context of an odd-lot offer, they will be required to make a positive election should they prefer to retain their Nedbank Shares.

The Nedbank announcement is available on Nedbank's website at www.nedbankgroup.co.za.
"

Points I think are worth noting about that quote are:

* It only says "has indicated its intention to consider implementing", not "will implement", so while it sounds pretty likely to happen, it's not definite.

* For those who hold in nominee accounts, it seems likely that the "less than 100 Nedbank Shares" test will be applied to the whole registered shareholding - i.e. the one in the name of the broker's nominee company that holds the combined holdings of all of its nominee customers who own shares in Old Mutual. So it seems very unlikely to be satisfied, and so the odd-lot offer seems likely only to apply to those who hold their shares as certificates or in CREST accounts (and I very much doubt that there's time to move to either of those forms of ownership before everything is due to happen next Monday).

The link to the Nedbank page in that quote might give more detail on both of those points - I haven't looked.

The distribution of Nedbank shares is at the rate of 3.21176 shares per 100 Old Mutual shares, which is rather more than 3. For anyone who currently holds between 3114 and 3333 Old Mutual shares (both ends inclusive) as a certificate or in a CREST account, that will make a difference to whether they will get less than 100 Nedbank shares.

For anyone with more than £15k's worth of Old Mutual shares (this doesn't apply to carioca, but might to others) and facing the same £75 broker commission to sell the Nedbank shares, it's worth looking at the difference in the amount of cash one subsequently needs to reinvest from the two courses of action: selling the Old Mutual shares now will give one roughly their entire current market value to reinvest, while selling the Nedbank shares afterwards will only give one the portion of that market value that is due to the Nedbank shares (whatever that portion is likely to be - I haven't tried to figure it out). If the difference between those two amounts is £15k or more, one will end up paying more than £75 extra stamp duty on the bigger reinvestment, making selling the Nedbank shares afterwards the cheaper option on overall costs.

One might still regard selling the full Old Mutual holding now as the better option even if it does turn out to be a bit more expensive on overall costs if the holding isn't tax-sheltered, because the CGT calculations will be simpler and more straightforward that way. How much extra one is prepared to pay for that that simplicity is of course a personal decision!

If one does want to sell the full Old Mutual holding now, I would suggest doing so in a way that settles this week, to avoid the complications that arise when a yet-to-be-settled trade is affected by a corporate action like this one. Brokers should deal with those complications and eventually get things right - but I've certainly known things look a bit confused for a while in such circumstances, and it may have needed some prompting from me to actually get them sorted out... For trades done with the standard T+2 settlement period, that means doing the sale by tomorrow (Wednesday 10th) at the latest.

Gengulphus

Alaric
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Re: Old Mutual "Nedbank Unbundling"

#172618

Postby Alaric » October 9th, 2018, 6:16 pm

Gengulphus wrote:
For anyone with more than £15k's worth of Old Mutual shares (this doesn't apply to carioca, but might to others) and facing the same £75 broker commission to sell the Nedbank shares


I've now had the ii corporate action notice. They don't support the South African market so they say they will attempt to obtain a certificate. Selling before the imminent deadline seems simpler. It may always be possible to buy back within a month once the dust has settled.

djbenedict
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Re: Old Mutual "Nedbank Unbundling"

#181372

Postby djbenedict » November 19th, 2018, 12:03 pm

Hmm, I wasn't paying attention and have now ended up with a small number of Nedbank 1 rand shares in my iWeb ISA. Annoyingly they cannot transact them at all (their online customer service people tell me). Therefore the only option to realise their value is to transfer them to another broker who does deal on the JSE. So... can anybody recommend such an execution-only broker? Thanks!

TreesieA
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Re: Old Mutual "Nedbank Unbundling"

#541788

Postby TreesieA » October 27th, 2022, 11:56 am

Appreciate I am very late to the situation! Am still stuck with some of the Nedbank Shares. Is anyone able to recommend the best way to sell them on the Johannesburg Stock Exchange? I only have 6 shares.
Many Thanks

TreesieA
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Re: Old Mutual "Nedbank Unbundling"

#547764

Postby TreesieA » November 18th, 2022, 4:22 pm

djbenedict wrote:Hmm, I wasn't paying attention and have now ended up with a small number of Nedbank 1 rand shares in my iWeb ISA. Annoyingly they cannot transact them at all (their online customer service people tell me). Therefore the only option to realise their value is to transfer them to another broker who does deal on the JSE. So... can anybody recommend such an execution-only broker? Thanks!


Did you manage to find someone appropriate to sell these? I have spent ludicrous amounts of time trying to resolve this problem!


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