Patrice Motsepe’s Berkshire Hathaway

ARC INVESTMENTS LISTS: WHAT’S IN IT FOR INVESTORS? The financial services company can best be described as a private equity fund wrapped in the shell of a public company.

Patrice Motsepe blew the kudu horn with vigour at the listing of ARC Investments at the JSE yesterday. The company will give the public the ability to participate in the same businesses the billionaire has invested in outside of African Rainbow Minerals.

So, the question becomes, what’s in it for investors?

The structure and operation of the investment holding company that joined the speciality finance sector of the JSE can best be described as a private equity fund wrapped in the shell of a public company, a little different from his mentor’s Berkshire Hathaway.

Motsepe referenced Warren Buffett in his opening speech: “We always learn when we meet [him] in Omaha or other parts of America. And what we learn always is this: Warren invests in the confidence he has in management, world class management, [global] competitiveness. All of the companies that we have invested in reflects the deep belief and faith we have in them and also the recognition that they are world class. I think we are going to do very well.”

Like the majority of Berkshire’s public company investments, ARC Investments prefers to take a sizable minority stake in investee companies, with the exception of its ownership in Indwe and Constellation Capital.

“It needs to be big enough for us to have a say in the direction of the company and big enough for our BEE credentials to count. And we want to know how they will become more competitive with us as a shareholder,” says co-CEO Johan van der Merwe.

African Rainbow Capital (ARC) seeded ARC Investments with an initial investment portfolio comprising 49.9% of ARC’s interests in its 16 financial services portfolio companies and 100% of ARC’s interests in its 17 nonfinancial services portfolio companies.

“We want to keep the financial services businesses together because there are synergies we think we can extract, whereas the industrial assets we invest in on a case-by-case basis,” says Van der Merwe.

The value of the investments transferred by ARC to ARC Investments is valued at R4.47 billion. The company raised R4.3 billion at listing and has made commitments amounting to another R2 billion, leaving it with a war chest of approximately R2.2 billion.

ARC opened at R8.68 per share and closed at R8.30.