Motsepe’s Arc to list later in 2018

Warren Thompson

African Rainbow Capital (Arc), the diversified black-owned financial services company, intends to list an investment holding company later this year on the JSE.

It will provide the public with an opportunity to participate in the growth and value creation of the company from a relatively early start.

Co-CEO of Arc, Johan van der Merwe, confirmed in an interview that the listing of an investment holding company would probably happen by the third quarter of this year.

The aim would be to hold majority stakes in a diverse array of non-financial services businesses. These would still be majority owned by Arc, and thus fully empowered, but would utilise public shareholders.

“It will also hold a stake in the financial services business [Arc] we are creating. We want to keep the financial services separate because we think we can build a cohesive business,” said Van der Merwe. The idea is that the financial services business will be much more operational in nature than the investments included in the holding company.

The listing of the vehicle will represent the second holding company that billionaire entrepreneur Patrice Motsepe has taken to market, following the listing of ARMGold in 2002. More importantly, the listing will provide another tangible demonstration of Motsepe’s own vision of radical economic transformation.

Motsepe has expressed repeatedly his desire to build a world-class business in financial services that will allow those less fortunate to share the fruits.

Capitec is to acquire a stake in a European online lending group, marking the first entry into international markets for the local bank focused on the lower-income market.

The group is to purchase a 40% stake in digital finance company Creamfinance for €21 million.

Wide spread

Creamfinance, founded in Latvia in 2012, offers consumer loan products in countries such as Latvia, Poland, Georgia, the Czech Republic, Mexico and Denmark.

Capitec said it sees synergies between its own long-term digital strategy and that of Creamfinance’s business model, technology and credit scoring methods.

“It is an appropriate match. Creamfinance’s online business model has been developed in such a way that new countries can be entered swiftly and efficiently, requiring limited investment in local infrastructure.

“Capitec’s focus will be to provide strategic input and give access to skills in key areas such as information technology, credit management and the development of term loan products, thereby assisting Creamfinance to further grow its international business,” said Gerrie Fourie, chief executive of Capitec.

He added that the group’s foray into the high-growth consumer fintech industry, through Creamfinance, has the potential to offer sustainable growth and capital generation.

While Capitec aims to gain experience in entering and operating in foreign countries, especially with respect to advancing credit in international and online environments, it will not be involved in the day-to-day running of Creamfinance.

Instead, it will provide “strategic input and give key access to skills in key areas such as information technology, credit management and the development of term loan products,” it said.

Existing shareholders will be given the option to sell 9% of the shareholding in Creamfinance to Capitec at a cost of not more than €5.4 million, effectively increasing Capitec’s stake to 49%.

According to Capitec, the South African Reserve Bank has approved an investment of up to 49% in Creamfinance.

We want to keep the financial services separate because we think we can build a cohesive business.

Johan van der Merwe Co-CEO of Arc