African Rainbow Capital to list

African Rainbow Capital, the investment company that mining magnate Patrice Motsepe launched in 2016, is going to the JSE on September 7 to raise R4bn in capital. /

African Rainbow Capital (ARC), the investment company that mining magnate Patrice Motsepe launched in 2016, is going to the JSE on September 7 to raise R4bn in capital.

Nearly half of ARC Investments will list on the main board of the JSE following regulatory approvals, with ARC majority shareholder Ubuntu-Botho Investments retaining 50.1% of the remaining shares, which will be priced at R8.50. ARC Investments will hold an initial investment portfolio valued at R4.5bn, comprising R2bn invested in the financial services sector and R3.5bn in sectors such as telecommunications, construction and agriculture.

“The R2bn [of the targeted capital raising] is already spoken for,” said ARC joint-CEO Johan van der Merwe, referring to commitments by the Public Investment Corporation, Sanlam Private Wealth and the Singaporean sovereign wealth fund.

“We already have a pipeline [of investments]. We would rather go to the market with this pipeline now.”

He was unable to provide further details on its investment pipeline, except to say they were in the company’s “building blocks” sectors — which include banking, insurance, property, telecoms, business process outsourcing — and viable firms that did not have much in the way of empowerment credentials.

ARC was in the advanced stages of setting up an insurance joint venture and had committed a certain amount of money to it, Van der Merwe said. “We’ve set up a property joint venture with Jonathan Beare … he’s a bit under the radar.” The reclusive billionaire mostly invests in commercial properties.

Van der Merwe said it was difficult to obtain government approval for development unless there was some kind of empowerment shareholding.

Ubuntu-Botho, which is majority owned by Motsepe’s family trust, together with other broad-based black empower- ment shareholders, brings empowerment credentials to the table. It is Sanlam’s empowerment partner and accrued R17bn in value when the empowerment deal matured.

Motsepe persuaded his fellow shareholders to reinvest R10bn in ARC, which has since invested about R5.4bn of this cash. “ARC presented an opportunity for Ubuntu-Botho to grow in various sectors, not just financial services,” said Van der Merwe.

ARC Investments’ portfolio will be housed in the ARC Fund, which has been structured as a private equity fund.

Van der Merwe said ARC had been advised the private equity structure was best for the company, positioning it for a move into the rest of Africa.

WE ALREADY HAVE A PIPELINE [OF INVESTMENTS]. WE WOULD RATHER GO TO THE MARKET WITH THIS PIPELINE NOW