Investec Share Discussion Threads

[m.t.glass] 13/3/2003 01:39

(extracts) From tomorrow's Telegraph:
By Andrew Cave, Associate City Editor


Investec... has been hit by fresh turmoil.

Jag Mundi, co-head of corporate finance, and David Currie, a managing director, resigned on Monday to run Numis Securities' advisory business. A day later, investment banking head Russell Chambers left the company.

..."Jag and David resigned on Monday. They were asked if it would make any difference if Russell Chambers left. They told the management it was too late, but Chambers was still ousted a day later."

Investec cut its investment banking and securities staff by 40 to about 110 people last month and now has 25 people in corporate finance and broking. One Investec banker said: "It is madness in here at the moment. There is blood on the carpet. The whole place is imploding."

Another said: "There are now three people at director or managing director level on the corporate finance team. A year ago, there were 12."

Mr Chambers .....could not be reached for comment...


See for full article.

[m.t.glass] 02/3/2003 08:58

From today's S.Telegraph:

"...Bankers say the cuts are a setback to Investec's ambitions to aggressively grow its business outside its home market in South Africa. Investment banks have made swingeing job cuts over the last two years - some estimates put the number of jobs lost at 20,000.

Crosthwaite admits the bank is "seeking to reduce higher-paid salaries". However, he argues the bank will not reduce service.

In the past five years, Investec has made a string of acquisitions in Britain. This included paying £472m for Hambros, the banking and fund management group, and Guinness Mahon in 1998, and buying Carr Sheppards, the London-based stockbroker and portfolio manager, in 1996..."

[m.t.glass] 27/2/2003 02:49

Investec scales back U.S. plans

by Heidi Moore
TheDeal.com
Updated 05:17 PM EST, Feb-26-2003

After spending heavily to create a full-service U.S. investment bank, South African financial services giant Investec SA is reversing course and closing much of the business, sources say.
Sources said that South African management has told its U.S. investment banking team that its fate will be decided before March 31. Its 5-month-old equity sales and trading operations have already been shut, and its equity research unit will soon be dramatically reduced.

Mark Segall, the CEO of the investment bank, said Investec is likely to turn its U.S. shop into an M&A advisory boutique, focusing on technology, life sciences and healthcare in the mold of many emerging-growth boutiques. Segall noted that the bank is also likely to keep its fixed-income operation.

The pullback, which has caught everyone in Investec's New York and Philadelphia offices by surprise, was orchestrated by the managers of the Johannesburg-based parent company, sources said. Investec entered the U.S. investment banking business in April 2001, when it bought PMG Capital. It named Segall, Investec's general counsel, CEO of the unit in November 2001 and moved quickly to recruit talent from firms like Robertson Stephens Inc., Thomas Weisel Partners, UBS Warburg and Merrill Lynch & Co.

At its peak, Investec Inc. employed a little less than 200 professionals in New York and Philadelphia — and 500 worldwide — with ambitions to be a full-service investment bank in the mold of Robertson Stephens, Thomas Weisel Partners and Hambrecht & Quist. Its headcount is now down to 80, with plans to shrink to about 30.

Sources said the partial shutdown started with the firings of members of the sales and trading team in late January — a team that was assembled only months earlier, when Investec hired six former employees of the defunct Robertson Stephens. All six had two-year employment contracts with Investec, which the firm has agreed to buy out.

"Investec looked at the whole equities environment globally, and they have a conservative view about what the equity markets will be doing," Segall said. "They didn't want to take the risk of growing that [business] in a U.S. platform."

Investec's internal projections showed the U.S. investment bank would break even in fiscal 2004 but also showed a risk of substantial losses, sources said.

In equity research, Investec once had 12 senior analysts; it now has far fewer. Robert Burleson, hired from Thomas Weisel Partners last May, and Anna Kazanchyan, hired from Wachovia Securities last July, have already left the firm.

Eric Ross, who joined along with Burleson from Thomas Weisel Partners, remains at the bank. Segall confirmed that the handful of analysts who remain are a transition team and that equity research will eventually be mostly phased out.

The analysts who have left were bought out of their employment contracts, sources said. Segall declined to comment on any matters involving contracts.

Investec plans to drop coverage of 45 stocks on Feb. 27 because of the moves, sources said.

Many Investec employees, who included refugees from strapped technology-focused firms, said they had hoped Investec's banking effort would offer a modicum of security because it was new.

"You just don't know who to trust anymore," said one ex-employee.

In January 2002, Investec started hiring bankers, including Frank Drazka, the co-head of the technology banking group at UBS Warburg, to build a tech team. Drazka's team included hires from UBS, Merrill Lynch and Robertson Stephens.

Later that month, it hired Roger Kahn from Tucker Anthony Sutro Gull to lead a life sciences banking practice.

The Investec sales and trading team included Gregory Holmes, head of trading; Jon Preizler, head of Nasdaq trading; Kevin Ronayne, head of listed trading. Other members of the team included managing director Steven Tripp and directors Peter Hansen and Shane Allen.

[m.t.glass] 25/2/2003 12:46

Interestingly, articles published tonight go out of their way to include paragraphs emphasising the distinction between Investec Ltd (the South African entity), and Investec plc (UK/US/etc), stressing that credit ratings attributed by Fitch - the international credit rating agency - apply to the S.African company, not the London one.

Sounds like maybe some more bad news is yet to be released re Investec plc? Or is the London outfit to be ditched altogether? Do tell us Radge ;-o
Why is South Africa distancing itself from the London operation so pointedly?


Example:

Investec said earlier this month it planned to cut corporate finance and equities jobs in London to reduce costs in the face of weak market conditions.

It has also sharply reduced its U.S. operation to streamline it into a boutique specialising in mergers and acquisitions, bond broking and fixed income, and an Israeli desk. Only 70 staffers are expected to be left in the operation when the company finishes its U.S. restructuring, down from 688 in March

[radgegadge] 25/2/2003 10:46

You obviously have a short position MT - fair enough, i'll let people decide what they want to believe rather than influence them for my own benefit.

Nothing has changed over the last few months. Try to bear in mind that the Plc has 5 divisions of which 1 the investment bank is suffering (how many other are?). Will see you in the summer once the speculators have gone.

[nirvs] 24/2/2003 18:09

I made up my mind and am now short at 682p. Their statment does not look at all positive....back to new lows shortly me-thinks

[radgegadge] 24/2/2003 16:30

For those that missed the presentation then go to www.investec.com and make your own mind up - be independent & don't follow the herd!

[radgegadge] 24/2/2003 16:05

MTG - as the price rose to £9.60 before falling which bit did u not understand?. Also if you have any idea of the market u will see this is simple short selling and not a sustainable drop in the price. I haven't got time to do much here but figured there would be some interest today.

The rand hedge is hurting but the core is still making money. Perhaps when reading these analyst quotes one should check which company they work for and whether they are making profit or not.......

[m.t.glass] 21/2/2003 11:06

February 21 2003 at 08:09AM

"...Investec's shares rebounded just over 4 percent to R82.30 on the JSE Securities Exchange yesterday, but there is little prospect of a recovery from the substantial decline from R160 a share when it listed in London last July...

....Three bank analysts said the major reason for the decline was the weak investment banking market, particularly in the UK. As a consequence, Investec was expected to report lower profit than anticipated for its financial year to March 2003....

"We have seen many analysts downgrade their earnings forecasts, which is never a good sign," one analyst commented...."

"..The gloom in the UK investment banking market deepened in February," said another..."

"....Investec is working off a high cost base in the UK and its asset management operations in the UK never really got off the ground in terms of profitability..."

....An analyst said he had been unable to ascertain whether Investec would have to fund a staff option scheme which was drowning because of the low share price....

[toffeeman] 21/2/2003 09:37

sorry wrong thread

[m.t.glass] 21/2/2003 00:34

This morning:

Johannesburg, Feb. 20 (Bloomberg) -- The following stocks are making substantial gains or losses today in South Africa. Ticker symbols are in parentheses after company names.... ...Investec Ltd. (INL SJ), which owns South Africa's second- biggest money manager and No. 5 bank, fell for the eighth day in nine on concern the bank's U.K. and U.S. investment banking units are losing money. Investec shares fell 2.5 rand, or 3.2 percent, to 76.5 rand, having lost almost a third of their value this year.

[m.t.glass] 20/2/2003 22:00

LONDON (AFX) - Investec PLC reaffirmed today that the operational
fundamentals of the group are sound.
It said that, in light of the recent movements in the Investec share price
and in response to a number of requests from various external parties, the
management will hold an investor briefing on Feb 24.
[e-mail]
slm/

[m.t.glass] 20/2/2003 21:50

With no trades higher than 605p today, MMs appear to have nevertheless made a concerted effort, after the buying ceased, to temporarily push the price high enough to generate a 'bullish engulfing' signal which would trigger further buys tomorrow by those whose alerts are set to react to such signals.

(You don't think they would?)(Company not that desperate?)

[m.t.glass] 20/2/2003 12:56

And this from the S.African 'Sunday Times' which discusses a possible imminent profits warning:

Sunday 16 Feb 2003

INVESTEC OFFSHORE GETS THAT SINKING FEELING

Richard Stovin-Bradford

Concerns about the profitability of Investec's offshore businesses continue to dog the banking group's share price, which has shed 30% of its value since the bank listed on the London Stock Exchange last July.

Investec's performance is in line with that of its overseas peers, which are also suffering from the global slide in share prices.

UK bank Close Brothers has seen its share price slump from about £8 to £4.50 in the past year. The only bank to buck the trend is Investec's role model, Macquarie Bank.

The fall in the Investec share price accelerated this week amid speculation the bank would warn shareholders that its profits for the financial year to March would be lower than last year.

During trade on Wednesday, Investec plc's shares fell 6.6% before closing 0.55% higher at R91. The intra-day dip did not pass unnoticed in London, where Investec has yet to prove its mettle.

Asked by Business Times this week whether a profit warning was imminent, chief executive Stephen Koseff was dismissive. "There is no profit warning. This is a rand strength situation and we are being hammered as a rand hedge - and we don't get credit for our rand earnings."

Koseff could not be reached for comment on Friday evening.

He said earlier that traders were jumping on the bandwagon and shorting Investec shares. But he saw the price weakness as an opportunity.

So did Investec managing director and London head Bernard Kantor, who bought 275 000 shares between Tuesday and Thursday this week at prices between R88.29 and R90.96.

In the run-up to Investec's half-year results to September, analysts complained that they had received little guidance from the bank on how to call its full-year earnings outcome.

But from the way forecasts for the full year to March have been talked down since then, analysts should not be expecting a profit warning - unless, as happened with Nedcor's full-year results this week, Investec's communications have created an impression that is shy of the mark.

The I-Net consensus earnings forecast for Investec Limited's full year to March is 1 587c or 1 673c for Investec plc, compared with last year's 1 840.4c - a fall of between 9.1% and 13.8%. The bank is scheduled to report on May 21.

Rumours of jobs cuts among Investec staffers in London earlier in the week may have fuelled speculation about the warning.

On Wednesday the Financial Times reported that Investec was planning to fire staff as part of a restructuring of its investment banking operations. At its last year end, Investec had 2 418 staff outside of South Africa.

[m.t.glass] 20/2/2003 12:51

Been scouring the South African press; Found this from Tuesday:

INVESTEC FALLS ON BANKING CONCERNS IN UK AND US

Bloomberg
February 18 2003 at 07:10AM

Johannesburg - Investec, which owns South Africa's second-biggest money manager, yesterday fell for the sixth day in seven on concern the bank's UK and US investment banks are losing money.

Investec ltd, the Johannesburg-traded arm of Investec, dropped 3.7 percent to R85.50, its lowest close since 1996.

Investec plc, which owns its London units, fell 3.9 percent to R85.50 in Johannesburg.

Shares in Investec ltd have declined 22 percent this year on concern a downturn in stock trading, share issues and mergers will deepen losses at its UK and US investment banks.

The UK investment bank, which lost R20 million in the first half, last week said it would cut jobs. The US investment bank lost R72 million during the same period.

"The UK is still running at a loss and their cost base is very high," said Kokkie Kooyman, who helps manage about R55 billion at Coronation Fund Managers and holds fewer Investec shares than their weighting in the benchmark indices.

"The bottom line is the investment banking market isn't very good," he said.

Deutsche Bank Securities, Barnard Jacobs Mellet, JP Morgan Chase and SCMB Securities have cut their earnings forecasts on Investec in the last five weeks, according to Bloomberg data and Thomson First Call.

Investec would probably earn R14.97 a share before one-time gains and losses and goodwill amortisation in the 12 months to March, according to the average forecast of the four analysts.

That's down from R17.30 a share a year ago.

Investec said in November that first-half earnings were hurt by a downturn in investment banking and weak stock markets could hurt full-year earnings.

"We don't talk about earnings forecasts in particular, but the trends are not too dissimilar from those we reported in September last year," said Ursula Munitich, Investec's investor relations spokesperson. - Bloomberg

[m.t.glass] 20/2/2003 02:10

From company responses quoted above, it sounds like they are (belatedly) managing expectations downwards, rather than being at all bullish. Is that how others here see it? And where is spokesperson Radgegadge now - among the jobcut victims perhaps?

"The UK is still running at a loss and their cost base is very high," said Kokkie Kooyman (this week, message 18)

"We are one of the few around with a profit making business and no staff cuts.." said spokesperson Radgegadge last September (message 4).

Some obvious connection there maybe?



Price has come down exactly 200p in one month!
Where will it be by the time results are out in May?

[m.t.glass] 20/2/2003 01:00

And found this from last Friday re the likely London job cuts:

INVESTEC TO CUT JOBS IN UK

Bloomberg
February 14 2003 at 08:34AM

London - Investec plc's investment banking and securities division was planning to cut jobs because of declining revenue, Perry Crosthwaite, who runs the London-based business of South Africa's fastest growing bank, said yesterday.

The unit, which employs 145 people, told staff on Wednesday night that it would begin a month's consultative process about the cuts, Crosthwaite said. He declined to say how many positions would be eliminated.

Companies had to form consultative committees to cut more than 20 jobs, he said.

The division provides small and medium-sized UK companies with corporate finance advice and sells and trades stocks. The UK's FTSE all share index has fallen 8 percent so far this year, following three consecutive years of declines, reducing investor demand for stocks and company demand for share issues or takeover advice.

"All we are doing is cutting costs in light of market conditions, we are not cutting any of our activities," Crosthwaite said. "We still believe the opportunities in the small- to mid-cap market are greater than ever."

London's financial firms would cut about 15 000 jobs this year because of declining revenue from share sales and takeover advice, the Centre for Economics and Business Research has predicted.

Investec would cut jobs across investment banking, equity sales, trading and research, as well as in processing and support areas, Crosthwaite said. The firm would continue research on all the industries it covered.

"The cuts will be spread fairly evenly across the different areas," he said. "We're trying to do it in as humane a way as possible without affecting the business."

The Financial Times earlier reported that Investec planned to cut some jobs. - Bloomberg

[m.t.glass] 19/2/2003 17:48

Is there a readymade list of those brokers, so we can tick through them one by one as they report? Carr Sheppards Crosthwaite is the only UK one mentioned on Investec's website, as far as I can see.

[cat] 19/2/2003 17:27

They bought stakes in a number of stockbrokers at very high prices 2 years ago. Those businesses are dying fast. £2.50 target

[m.t.glass] 19/2/2003 16:23

Tis looking very poorly as it teeters on the edge of six quid.

"..given the current market conditions i think in the next 12-18months we can expect to see us rise to closer to £9.50/share..." (Message 6, 17 Sep 02)

Radgegadge; - with 5 of those 12-18 months gone, and the price now 140p lower, are you standing by that estimate? It would take a rise of about 55% in a year to get there from now.

mtg

[seagreen] 12/2/2003 11:33

People are apparently concerned about a £10 million cost base in this market was one comment I heard in conversation, but have no personal kowledge of facts etc

[diamondal] 12/2/2003 09:50

ANYBODY OUT THERE WITH ANY THOUGHTS ON THIS ONE. SHARE PRICE CONTINUES TO SLIDE ON A DAILY BASIS

[your_auntie] 24/10/2002 16:04

Good points.