Know your Brands: African Rainbow Capital Investment Limited

You might not be familiar with the name African Rainbow Capital Investment as a brick-and-mortar store; in fact, the company is an investment firm and serves as a fully-owned subsidiary of Ubuntu-Botho Investments (UBI). African Rainbow Capital Investments Limited (ARC) operates as an investment holding company that was founded and is chaired by Dr. Patrice Motsepe, one of South Africa's first billionaires. Dr. Motsepe is also the chairman of UBI.

The firm, through its subsidiaries, invests in asset management, banking, healthcare, life insurance, property, agricultural, construction, energy, telecommunications, and financial services sectors. Through the ARC fund, they invest in market disruptors and inventors in different industries including financial and telecommunications. They also serve customers in South Africa and Mauritius.

As of September 2022, the ARC fund had invested in nearly 50 companies. These companies include:

Disclaimer: The holdings may not be limited to the logos on the image and may change. The use of logos are for educational purposes only.

Here's the full list of companies it has invested in. The stakes (as of December 2022) that play major roles within the ARC fund include:
•    Rain, which makes up 26.6% of the ARC fund,
•    Tymebank - 14.1%
•    Kropz Plc - 10.1% 
•    Alexforbes - 7.5% 
•    Tyme Global - 5.1% 
•    ARC Investments - 4.3% 

View a breakdown of the ARC fund structure here

Financials, dividends and buyback

ARC had an intrinsic value of R13.2 billion (R9.97 per share) by the end of its six months that ended in December 2022. Its cash in the ARC fund by the end of the period was R1 billion, which was a 57% increase from the first half of its financial year, and its debt also increased by 43% to 1.3 billion. 

Although it may not have been paying dividends, recent results show that: “The Company’s effective share in dividend income for the period under review increased by 30% to R79 million in the six-month period ended 31 December 2022, as compared to December 2021.” Read more here.

Are they still expanding? 

By the end of its six months which ended in December 2022, ARC revealed that it finalized deals worth R1 billion, increasing its focus on financial services and investing more in its current Financial Services Investments (ARC FSI) portfolio. It also bought a minority stake in Optasia, a company that provides airtime to prepaid mobile subscribers in more than 30 countries with over 88 million monthly customers. TymeGlobal launched GoTyme in the Philippines; Tymebank aims to launch TymeHealth (an affordable medical insurance in South Africa), and it acquired Retail Capital that’s intended to support offerings to SMEs. 

Aside from expanding, ARC has also been trimming its portfolio. It sold its remaining stake in Afrimat for R486 million, achieving a 27% return on investment (ROI). In total, disposals during the period are valued at R1.3 billion. It also sold its stake in Capital Appreciation, Humanstate, Payprop, and Mooiplaats Coal.

In its latest results, the firm said: “The adjustments to the portfolio are in line with the revised strategy that the Company announced in 2022. ARC Fund has disposed of non-core assets in its Diversified Investment portfolio, reduced its exposure to listed shares that can be acquired directly in the market, and bulked up the Financial Services portfolio through bolt-on acquisitions and synergistic transactions in the current portfolio.”

Earnings 

 African Rainbow Capital Investments Limited is expected to release its earnings in September 2023. To invest in African Rainbow Capital Investments, click here or head over to your EasyZAR account to buy either full or a fraction of the shares!