MOTSEPE, BEARE WANT YOUR BUILDINGS
R700 million in decent deals, then we will spend R700 million. If we get R6 billion of excellent deals, we will spend that in a year.” The ‘black Remgro’? “Maybe it sounds a little arrogant, but what [we] want to achieve is basically a black Remgro,” said Van der Merwe.
“A big diversified investment trust that is black empowered where we give the investee companies the BEE scorecard.”
ARC is a product of Sanlam’s 2004 BEE deal with Ubuntu-Botho Investments, of which Motsepe owns 55%.
The 10-year-deal expired in 2014 and left Ubuntu with 14.5% of Sanlam, now worth about R20 billion.
ARC is the investment company created to invest that capital and is wholly owned by Ubuntu.
ARC has two CEOs: Johan van Zyl, previously CEO of Sanlam, and Johan van der Merwe, previously CEO of Sanlam’s investment businesses.
“We borrow against those shares to do all these transactions, we have not sold a single share. We don’t intend to sell,” said Van der Merwe.
ARC has spent or committed roughly R4 billion since its launch a year ago.
This includes the R500 million for the new property company, R435 million spent on shares in construction supplies company Afrimat last year, about R700 million for Alexander Forbes shares and R300 million for shares in listed services company EOH.
“Some transactions are already deep in the money,” said Van der Merwe.
“We bought Afrimat at between R16 and R17 per share, it is trading at R30 today so that’s over R300 million profit on that one.”
Van der Merwe is conscious of how it looks when a major black-owned company is run by two white men called Johan.
“We want to make money for the shareholders and the shareholders are black,” he said.
Even though Motsepe is the dominant shareholder, Van der Merwe points out that Motsepe is part of the so-called Giving Pledge started by Bill Gates.
This means he will donate half of his income every year to charities for the rest of his life.
ARC’s other shareholders include a development trust and a variety of broad-based black groups.