Shares in African Rainbow Capital (ARC) Investments slumped 2.44% in afternoon trade on the JSE yesterday after the company said it was assessing delisting against the backdrop of a modest economic growth outlook for South Africa.
ARC Investments weakened to R7.20, in stark contrast to its stronger performance in the past week, half-year and year-to-date comparatives. ARC Investments has traded 10.15% and 50.92% stronger in the past 30 days and year to date respectively.
The company has investments in Rain and TymeBank, among others.
“In the next financial year, the board will be focusing on the assessing a delisting of ARC Investments while continuing to deploy strategies to narrow the discount to net asset value,” the company said in its annual report released yesterday.
Additionally, said the company, ARC Investments will continue “to exit non-core” and mature investments.
Apart from this, ARC Investments will be seeking to consolidate resources in the ARCH Emerging Markets Fund and focusing on a single, Africa-focused infrastructure investment fund to facilitate growth in funds under management.
Other key focus areas include increasing capital allocation to the financial services sector, especially in the disruptive fintech space.
Although the company is expecting “modest” recovery given structural constraints across SA’s economy, founder Patrice Motsepe is seeing positive recovery signs in the outlook.
“We see positive signs of economic recovery on the horizon. We anticipate a more favourable investment climate with interest rates expected to decline,” said Motsepe.
ARC Investments had raised the value of its portfolio by 21.5%, with the R3.8 billion increase in rand terms, comprised of a net capital investment of R1.3bn funded in part by a R750 million rights issue and a R2.7bn positive revaluation of the portfolio. This translated to a return of 16.1%.
“The R1.3bn net capital investment was mainly used to support growth in the financial services sector (Tyme Group – R169 million and the ARCH Emerging Market Funds – R161 million) and telecoms (Rain – R126 million),” said the company.
ARC Investments had also invested R143m in ARC Investments, taking advantage of the deeply discounted
share price and provided R602m of additional support to Kropz, “in line with our strategy to participate in South Africa and Africa’s strategically important requirement to preserve food” security.
According to ARC Investments co-CEOs, Johan Vaan Der Merwe and Johan Van Zyl, TymeBank is “now ready to focus on the next stage of its journey” which encompasses “expanding its credit card offering and a range of credit” advances.
In the Philippines, GOtyme had “demonstrated strong business performance, growing faster with much higher activity levels and deposits compared to TymeBank at a similar stage of development” in SA.
Moreover, a recent pilot project in Vietnam had also shown signs of performing well, said ARC Investments. The group also performing well announced plans to enter Indonesia before the end of this year.
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