African Rainbow Capital (ARC) Reports Increase in Net Value

African Rainbow Capital Investments, a financial services company, on Tuesday, September 13, reported a significant increase in its intrinsic net asset value per share of 14.7% as part of its financial results for the year ended June 2022. It claimed that some of the companies it has invested in, including Rain, TymeBank in South Africa, Tyme Global in Singapore, Alexforbes, Fledge Capital, and Capital Legacy, have had successful financial years as a result of their investments.

According to ARC Investments, it was able to increase the value of its entire portfolio—excluding cash—by 11.3% to R13.6 billion during that time. The organization owns shares in 52 businesses in several different economic sectors, including the telecommunications and financial services industries.

Johan van der Merwe, ARC’s co-CEO said that the period under evaluation had been characterized by restrictive trading conditions.

“The period under review has been characterized by constrained trading conditions, although there appears to be some economic recovery in some sectors underway.

“Notwithstanding difficult trading conditions, most of the key assets in our portfolio delivered strong results, while others continue to show improvements in their financial performance. Despite the adverse trading conditions, the diversified nature of our investment portfolio has shielded the overall performance of the portfolio from the vagaries of the market.”

Kropz, Rain, and TymeBank are the three biggest assets in the African Rainbow Capital Fund, accounting for 45% of the portfolio’s total value.

R56 million more was invested in Rain during the course of the year. In the government-sponsored spectrum auction, Rain participated successfully and won 20 MHz in the 700 MHz band and 20 MHz in the 2.6 GHz band for a total of R1.43 billion. According to ARC, the spectrum given to Rain will greatly increase its competitiveness.

Over the time period, the investment in Rain owned by the ARC Fund increased in value by 9.7% to R3.6 billion.

In its fiscal year that ends in February 2022, Rain met its target of R1 billion EBITDA. This translates to an EBITDA of more than R3 billion on an equivalent IFRS16 basis. In addition to the current concentration on fixed (home) wireless networks, ARC stated that mobile would be a future focus.

TymeBank digital bank, raised $150 million successfully from new investors Tencent and the CDC, with a number of the current shareholders also exercising their rights. 36 months after its establishment, TymeBank currently has 5 million customers, according to ARC.

In August 2022, it began rolling out a number of hundred TFG (previously The Foschini Group) kiosks over the course of four months. A new SME focus is expected to be driven by TymeBank’s recent acquisition of SME lender Retail Capital, although some regulatory permissions are still pending, according to the investment firm.

“With Covid largely behind us, we’ll enter a phase of reviewing our portfolio and consider some pruning over the short to medium term. We have received some unsolicited offers for our shareholdings in a few companies, which we are considering. Should we decide to dispose of some of our investments, we expect the net result will be a more focused portfolio over the medium term,” said van Zyl.