African Rainbow Capital (ARC) Investments, which maintained a steady value to its portfolio in the six months to December 31, said low-cost data provider rain would soon launch a mobile service, using spectrum gained in the recent government spectrum auction, co-CEO Johan van Zyl said yesterday.
Rain is the key asset in the portfolio of the empowerment investment holding company ARC Investments, and its 20.3% interest in the telecoms group was valued at R3.64 billion.
Van Zyl said the telecom industry had been affected by load shedding and battery theft, which led to rising costs. However, demand and sales remained robust.
He said rain was already well-positioned as a low-cost data provider.
Rain’s earnings before interest, tax, depreciation and amortisation was on track to exceed R2bn over the year to February 2023, said Van Zyl.
The second major portfolio asset is TymeBank, the digital bank. ARM’s effective investment in TymeBank, through the ARC Fund and ARC Financial Services Holdings, is R1.92bn.
The bank was launched in February 2019 and has 6.2 million customers. TymeBank and The Foschini Group (TGF) recently launched a partnership that installed 600 kiosks at 22 TFG brands, almost doubling TymeBank’s distribution across South Africa.
It the six-month period, Retail Capital was also acquired to support TymeBank’s business banking offering.
ARC Investments portfolio value did not yet reflect all the benefits of activity in the period, including a R1.13bn disposal in ARC Fund that included Afrimat, Humanstate, Payprop, Capital Appreciation and Mooiplaats Coal Holdings.
The disposals were mainly in line with long-term portfolio rationalisation and repositioning initiatives, co-CEO Johan van der Merwe said in a statement yesterday.
The intrinsic net asset fell marginally by 1.7% to R9.88 on a per-share basis. Cash increased by 57% to R1.05bn and debt by 43% to R1.4bn. The share price was up 0.7% to R7.14 yesterday afternoon.
ARC Fund also did R1.09bn of acquisitions to increase the financial services portfolio, particularly in Fintech.
These deals included additional investments in TymeBank, Tyme Global and ARCH Emerging Markets, and a minority holding in Optasia, an airtime credit service provider to prepaid mobile subscribers with more than 88 million monthly customers in more than 30 countries.
Van der Merwe said the portfolio proved resilient in the tough macroeconomic environment.
“Our efforts to rationalise and reposition the portfolio also achieved good traction. The rationalisation has resulted in ARC Investments realising an IRR above our expected return in most of the assets sold,” he said.
BUSINESS REPORT