African Rainbow Capital (AIL), the South African investment holding company started by billionaire Patrice Motsepe in 2016, is raising R4 billion to list its assets on the main board of the JSE. Just over half of the shares are already committed to the Public Investment Corporation, Sanlam Private Wealth, and Singapore’s sovereign wealth fund. Motsepe approached Johan van der Merwe and former Chief Executive Officer of Sanlam, Johan van Zyl, to start the investment company that will boost black participants in the economy.
Up to R4.0 billion of primary capital will be raised through 223,147,060 ordinary shares at a price of R8.50 per share, which represents 22.45% of the shares at listing. The expected market capital of African Rainbow Capital will be R8.5 billion at listing. The net proceeds of the capital raised will be invested in the ARC Fund to take advantage of opportunities in the financial sector.
Alexander Forbes Ltd’s investment of R288 million makes up 5% of the total portfolio, and is the biggest investment thus far in ARC. Fifty percent of the company’s portfolio will consist of Alexander Forbes, Ooba, AfroCentric Health, Colourfield, Indwe Risk Services, Commonwealth Bank and A2X Markets. A2X Markets, the new exchange that will be competing with the JSE, also has the opportunity to trade in ARC shares as the company is partly owned by ARC.
The company that I’m interested the most is Tyme, the digital banking company that is partly owned by Commonwealth Bank of Australia and ARC. Tyme was granted a provisional banking license by the South African Reserve Bank in 2016 and is looking to increase competition in the South African banking sector. Capitec was the first bank to show some innovation in the age-old banking industry, and Tyme is set to take them head on.
The other interesting investment is Rain, a full-service Mobile Network Operator focusing on data as primary offering, and building a national LTE-Advanced (4G+) broadband service.
The board and key investors
- Patrice Motsepe - Independent Non-Executive Director
- Johan van Zyl - Non-Executive Director
- Johan van der Merwe - Executive Director
- Tom Boardman - Chairman
The key investors will be Patrice Motsepe, PIC, Sanlam Private Wealth, and Singapore’s sovereign wealth fund. Other investors include Paul Harris and GT Ferreira (founding members of RMB), Michael Jordaan (former CEO of FNB, and venture capitalist).
Listing and IPO
The listing is all set for Thursday the 7th of September. Patrice Motsepe announced on Tuesday that the offer is already oversubscribed, which makes it likely that the share price will see a big jump on its debut.
You can track the intraday progress of the shares’ debut over here.
Analyst and Securities Trader
Daniel is a full-time analyst and securities trader, and is responsible for equities research across industries. Although he grew up in a small town in the Klein Karoo, Daniel has always been interested in both locally and internationally traded companies. Daniel has been actively investing and trading on the JSE and other global exchanges since starting his Bcom Investments Degree at the University of Stellenbosch, which he completed in 2014 . During his studies, Daniel worked as an intern at Kruger International in Johannesburg in 2015, gaining valuable experience from Hein and Mia Kruger. He is currently a CFA candidate.