The combined boards of Investec plc and Investec Limited and the board of Kensington Group plc have announced agreement on the terms of Investec’s offer. 

Under the terms of the offer, each Kensington shareholder will receive 0.7 Investec share plus a special dividend of 26 pence (payable by Kensington) for each Kensington share, valuing each Kensington share at 519.5 pence per share based on an Investec Share price of 705 pence per share on 29 May 2007, being the last business day prior to the making of this announcement, and the entire issued and to be issued share capital of Kensington at approximately £283m. The new Investec shares will not qualify for the final dividend of 13p per Investec share that the combined boards of Investec and Investec Limited have proposed for the financial year ended 31 March 2007. 

The Investec Group is an international specialist banking group that provides a diverse range of financial products and services to niche clients in three principal markets, the United Kingdom, Australia and South Africa, as well as certain other geographies. The Investec Group has five core business divisions: Investment Banking, Capital Markets, Private Client Activities, Asset Management and Property Activities. Upon completion of the Offer, Kensington will become part of Investec’s Capital Markets division, which reported strong growth in operating profit before goodwill and non-operating items of 75.3 per cent to £117.3m in the financial year ended 31 March 2007. 

Founded in 1995, Kensington is a specialist lender offering first and second charge mortgages. Kensington specialises in lending to people who do not conform to the rigid criteria of traditional lenders, such as the self-employed, contractors, older borrowers, temporary employees and those with an adverse credit history. 

The combined boards of Investec and Investec Limited expect the acquisition of Kensington to be earnings enhancing before synergies in the first full year after completion. This statement should not be interpreted to mean that per share earnings of the Investec Group for the current or future financial years, or those of the combined group, will necessarily match or exceed the historical published per share earnings of the Investec Group. 

The scheme is expected to become effective by the end of August 2007. 

Stephen Koseff, Chief Executive of Investec, commented: “The proposed acquisition of Kensington is in line with our stated objectives and reinforces our successful Capital Markets business. We are confident that under our ownership, the Kensington franchise will be reinvigorated and that our combined businesses will be well placed to benefit from the growth of the non-standard mortgage market.” 

Bernard Kantor, Managing Director of Investec, commented: “We look forward to welcoming Kensington, and its employees led by Alison Hutchinson, to the Investec group. We have been impressed by the enthusiasm of Kensington’s management and staff, who share our vision of creating a distinctive, specialist banking group delivering superior service and products to our customers.” 

Peter Birch, Chairman of Kensington, commented: “This offer secures the future of Kensington within a stronger group with complementary capabilities and at a fair price, and enables shareholders to share in the value to be created by thecombination. 

The Investec Group is a strong specialist lender and will be bringing its entrepreneurial culture, robust risk management discipline and competitive funding to boost Kensington’s acceleration into new products, channels and markets. I am confident that Kensington’s attractive franchise will prosper under Investec’s ownership, and that it will be well placed to capture the considerable opportunities in the specialist lending arena.”