AFRICAN Rainbow Capital Investments (ARC Investment) shed more than 6 percent on the JSE yesterday after the investment holding company said it planned to raise R750 million through a rights offer to raise additional capital to invest in the ARC Fund.
ARC Investments will offer 272.73 million ordinary shares at a price of R2.75 a rights offer share in the ratio of 26.09711 rights offer shares for every 100 existing ordinary shares held on the record date for the rights offer, which is September 25.
The rights offer price represents a 5.4 percent discount to the 30-day volume weighted average price of the ordinary shares as at September 3, 2020, being the last practicable date.
“The purpose of the rights offer is to raise additional capital for ARC Investments to invest in the ARC Fund for use in the ARC Fund’s existing portfolio companies as well as for future acquisition opportunities, and for purposes of settling the outstanding fund management fee,” the group said.
ARC Investments also released its full-year results yesterday, reporting a 2.1 percent increase in its intrinsic net asset value in the ARC Fund to R9.54 a share for the year to end June.
ARC Investment is an investment holding company owned by mining magnate Patrice Motsepe.
It uses ARC Fund as its investment vehicle and ARC Fund’s intrinsic value increased by 19 percent to R11.14 billion during the period.
The group said the period under review was characterised by strained trading conditions, which are mainly the result of a contracting economy in the country.
“This has adversely impacted most of the companies in our portfolio. An already poor-performing economy was exacerbated by the sudden onset of the
Covid-19 pandemic which led to the announcement of a state of disaster and a national lockdown on general economic activity. As a result, some of our investee companies generally experienced low consumer, business and investor confidence, all of which were intensified by the impact of Covid-19,” the group said.
However, its investment in Rain, a mobile network operator, proved resilient by experiencing a surge in subscriber numbers as people moved to a work-from-home environment during the lockdown.
Rain 4G roll-out has also progressed well with 5 500 active sites live as at the end of April. Rain also rolled out 447 5G towers by the end of April and it aims to increase the number to 1 500 by December 2021. The ARC Fund’s investment in Rain increased to R3.11bn at the end of June.
Its other investment in TymeBank, a digital bank, accounts for 8.3 percent of the fund, up from 7.2 percent compared to 2019. The group said the bank on-boarded 1.9 million customers, which is ahead of its business plan after signing up between 3 000 and 3 500 customers a day. ARC Financial Services Holdings contributed R750m to TymeBank during the period.
ARCI Investment shares closed 6.36 percent lower at R2.65 on the JSE yesterday.