Leading empowerment investment holding company African Rainbow Capital Investments (ARC Investments) today announced full-year financial results for the year to 30 June 2019.
ARC Investments (the listed entity) is majority owned (51.1%) by African Rainbow Capital (the unlisted entity), which in turn is 100% owned by Ubuntu-Botho Investments.
Dr Johan van Zyl, co-Chief Executive Officer of African Rainbow Capital, commented:
“Our performance in the period under review has been significantly impacted by a challenging economic and political environment, which hampered the performance of most of the entities in which we are invested. Our objective is to grow the Intrinsic Net Asset Value of the investments in our portfolio by at least 16% per annum over the long term. For the year under review we only achieved 2.5%."
ARC Investments increased its Intrinsic Portfolio Value by 14.9% to R9,359 billion and made a number of direct and indirect acquisitions of which the most significant being in the new digital bank, TymeBank as well as the insurance business Rand Mutual Holdings.
While ARC Investments has the stated investment strategy of investing for the longer term, the company had the opportunity to dispose of its 20% shareholding in the agribusiness BKB. ARC Investments acquired the investment for R219 million at listing and sold it in December for R410 million.
The top six investments, measured in terms of its value in the portfolio as at 30 June 2019, are the following:
Rain is aiming to become a full-service Mobile Network Operator, focusing on data as a primary offering. Rain is building a dedicated national LTE Advanced network and infrastructure that will eventually offer the best quality possible and internet speed, at affordable rates. The business is well positioned to become a major player in the 5G data market in the near future.
ARC Financial Services increased its holding to 100% in TymeBank in November 2018 when it purchased the 90% interest previously held by Commonwealth Bank of Australia. With the introduction of new partners in the bank through a series of capital raises, the 100% controlling interest held by ARC Financial Services reduced to 65.5%. This equated to an effective ownership interest of 32.8% for the ARC Fund.
TymeBank offers consumers a cost-efficient banking solution that is easy to access and transact. In the period to 30 June 2019, TymeBank acquired 500 000 clients. The bank has a target of on-boarding one million clients by December this year.
3. Alexander Forbes
Alexander Forbes is a leading provider of integrated retirement, investment, life and insurance solutions with the objective of creating, growth and protecting the wealth and assets of their clients.
4. Rand Mutual Holdings (RMH)
RMH has a strong competitive position in the COID (Compensation for Occupational Injuries and Diseases) sector. The business is a subsidiary to Rand Mutual Assurance, which was formed in 1894 and administers workmen's compensation.
Afrimat is an open pit mining company and it supplies a broad range of construction materials and industrial minerals to clients. In the period under review, the business experienced some challenges but managed to recover well with the share price responding favourably.
GemCap focuses on investments in Business Process Outsourcing and their focus is on industry wide platforms and portal solutions. They have a good pipeline of investment opportunities.
Says Mr Johan van der Merwe, co-Chief Executive Officer of ARC:
“In a relatively short period of time we have managed to build a focused portfolio of financial and non-financial investments. Our next phase of unlocking value is to focus on the synergistic opportunities that exist between many of the portfolio companies in which we have invested. In our experience, many of our portfolio companies have naturally explored joint business opportunities which could be of value to them. If they succeed in deriving value, then certainly ARC Investments will stand to benefit as well. Our objective remains to reward our shareholders with long-term capital growth opportunities.”
ABOUT UBUNTU-BOTHO INVESTMENTS
Ubuntu-Botho is a broad-based empowerment company which has as its key asset a 12.5% shareholding in the financial services group Sanlam. UBI, which is Sanlam’s largest shareholder, has currently over 500 individual black shareholders, which makes it one of the true broad-based empowerment success stories in South Africa over the past two decades.
The company offers solid Broad-based Black Economic Empowerment credentials to companies seeking a reputable empowerment partner. ARC Investments boasts a strong balance sheet and its financial health is considered very attractive. Coupled with the well-experienced leadership and business track record of its key management after having managed major listed and unlisted businesses, it results in an attractive value proposition to prospective business partners. Given these positive characteristics, ARC Investments can create value for stakeholders over the longer term as it sees itself as a long-term investor.