Ninety One is one of the few UK stocks to be trading up on its admission to the London Stock Exchange this morning thanks to the business knocking upwards of 29% from its price over the last fortnight.
The £122bn asset management business listed at 135p on Monday morning and had reached 141p by mid morning.
In contrast, the FTSE 100 was down over 7% and rivals to Ninety One were exhibiting more beta than the market with Schroders falling over 11% and M&G down almost 16%.
Ninety One was ‘marked down off market’
Seven Investment Management senior investment manager Peter Sleep pointed to the fact the company expected to achieve between 190p and 235p two weeks ago.
“The actual price of 142p is a realistic starting point given what has happened in the recent past. If you like, it was marked down off market,” Sleep said.
Investec shareholders now own one Ninety One share for every two shares they held in the parent company, a technicality that has contributed to its shares falling almost 45% this morning.
Ninety One and supermarkets among the few stocks rising
Chelsea Financial Services managing director Darius McDermott said he was surprised anything was up today.
“Clearly there is still some demand out there for businesses, but I have to say you would think on a day like today when markets are being hammered across the board that that is particularly good performance, and not one we would have expected. Some stocks in the mid cap fell 20 to 30%.”
Supermarkets and online delivery services, such as Sainsbury’s and Ocado, were among the few stocks trading up in morning trading.
“It very well may be that they priced it at a fair rate, which is why it’s not getting as hammered. But it’s just so hard to say anything in these markets at the moment because it’s such a moving situation.”
Investec share price delivers technical reaction
Investec “obviously felt that they have a sufficiently strong shareholder base to go ahead”, said AJ Bell investment director Russ Mould.
Investec Group will hold 25% of shares and Ninety One employees will hold 20% of stock, an ownership model that the asset manager has said will help it attract talent.
Mould pointed out Standard Life demutualised just ahead of the financial crisis “and until recently that’s been a fantastic performance”.
He said: “If the investment case is strong enough and the valuation is attractive enough things can still go well. But with a lot of the fund management stocks, there is a danger they’re treated as market proxies and trade accordingly, that’s your short-term danger.”
Hendrik du Toit argues why Ninety One will be resilient
McDermott described Ninety One as a “reasonably well diversified” fund house.
“They have a commodities franchise, they have equities, they have a value strategy and they have a quality equities business under Simon Brazier, which also has UK and global funds. They have multi-asset funds.”
Ninety One founder and chief executive Hendrik du Toit (pictured) emphasised the asset manager was a capital-light business with a commitment to employee ownership in a regulatory filing on Monday morning. Du Toit said that would support the company through “extraordinary market volatility”.
Mould said the chief executive’s point that Ninety One is a capital-light business made sense.
“Asset gatherers are scalable businesses when they go very, very well. So if assets continue to rise and performance is good, in the long run, it’s got every chance to thrive.”
