Mot­sepe on an ex­pan­sion drive

The Star Early Edition - - BUSINESS REPORT - Bloomberg and Staff Re­porter

SOUTH African bil­lion­aire Pa­trice Mot­sepe’s African Rain­bow Cap­i­tal (ARC) and African Rain­bow Min­er­als (ARM) are on an ex­pan­sion drive, it was dis­closed in in­ter­views at the World Eco­nomic Fo­rum.

ARC plans to close as many as 30 deals by June and is con­sid­er­ing an ini­tial public of­fer­ing or start­ing a fund to at­tract cap­i­tal for the next phase of the in­vest­ment com­pany’s growth strat­egy.

Mean­while ARM is look­ing to ex­pand min­ing op­er­a­tions in South Africa.

ARC is fi­nal­is­ing 15 trans­ac­tions and hopes to con­clude an­other 15 in the first six months of this year, said Jo­han van Zyl, the co-chief ex­ec­u­tive of­fi­cer of the South African in­vest­ment com­pany.

Af­ter us­ing its own money for these deals, ARC aims to find part­ners who would in­vest their own cash for fur­ther ex­pan­sion through av­enues such as rais­ing a fund or a share sale, Van Zyl said.

ARC had its of­fi­cial start in April last year and said its fo­cus would be on South Africa with in­vest­ments in a broad range of fi­nan­cial-ser­vices ven­tures. To date it has done 25 deals over and above its in­vest­ment in in­surer San­lam and has spent about $500 mil­lion, ac­cord­ing to Van Zyl.

Listed en­ti­ties

It is in­vested in com­pa­nies in­clud­ing ad­vi­sory firm Bravura Group, in­sur­ance bro­ker Indwe Risk Ser­vices, mort­gage orig­i­na­tor Ooba and a prop­erty de­vel­op­ment in the Western Cape called Val de Vie, which has a polo es­tate that hosted Bri­tain’s Prince Harry.

In the next six months many of ARC’s in­vest­ments will be in “listed en­ti­ties” and fairly big com­pa­nies, Van Zyl said. The deals will fo­cus mainly on in­sur­ance firms while also in­clud­ing in­dus­tries such in­vest­ment man­age­ment, se­cu­ri­ties trad­ing, prop­erty and health, he said.

Mean­while, ARM is eye­ing growth op­por­tu­ni­ties in South Africa at a time when for­eign-owned firms are leav­ing be­cause of ris­ing costs, fall­ing re­serves and reg­u­la­tory un­cer­tainty. ARM’s ex­ec­u­tive chair­man Mot­sepe founded ARM by buy­ing up un­wanted gold as­sets in the 1990s as South African com­pa­nies looked to grow over­seas. Now, with min­ers in­clud­ing An­glo Amer­i­can re­duc­ing their ex­po­sure to the coun­try, sim­i­lar op­por­tu­ni­ties are aris­ing.

“We are in­ter­ested in grow­ing in South Africa,” Mot­sepe said last week. ARM is look­ing at “one or two” as­sets owned by An­glo Amer­i­can and “if we can make suf­fi­cient progress in the in­ter­est of both par­ties, we’ll make an an­nounce­ment,” he said.

ARM prob­a­bly won’t bid for Kumba Iron Ore, which is be­ing sold by ma­jor­ity-owner An­glo Amer­i­can, even though it owns neigh­bour­ing mines, chief ex­ec­u­tive Mike Sch­midt said last year. The com­pany would in­stead seek to work to­gether with Kumba on deals such as shar­ing re­sources and swop­ping land, Mot­sepe said.

It’s likely that ARM will keep its 14.7 per­cent stake in Har­mony Gold Min­ing, Mot­sepe said. He’s pos­i­tive on the out­look for bul­lion prices be­cause of un­cer­tainty stem­ming from Don­ald Trump’s US pres­i­dency and the UK’s de­ci­sion to exit the EU. “We’re happy with Har­mony,” he said. “It’s a long-term in­vest­ment for us.”

Bil­lion­aire Pa­trice Mot­sepe’s ARC and ARM are on an ex­pan­sion drive. ARC plans to close up to 30 deals by June while ARM is look­ing to ex­pand its min­ing op­er­a­tions.

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