African Rainbow Capital successfully listed ARC Investments, its new investment entity, on the Johannesburg Stock Exchange on Thursday last week, raising R300 million (about $23 million) more than the R4 billion ($307 million) it had originally targeted. When the listing plans were first announced, Public Investment Corporation, the manager of the South African government’s employee pension fund, asset manager Sanlam Private Wealth and GIC, Singapore’ sovereign wealth fund had already committed R2.1 billion between them to the raise.
Proceeds of the raise will be used to pursue other investment opportunities and fund the balance of the price tag for its most significant investment to date, a 20% stake in Rain, a fixed and mobile data network provider owned by Multisource Group, which it acquired at the beginning of August. The new entity has been seeded with almost half of ARC’s financial services assets and all of the firm’s non financial services interests which include its investments in the agriculture and telecommunications sectors. ARC’s stakes in Alexander Forbes, Santa, and fledgling stock exchange A2X are among those held by ARC Investments, whose total portfolio has been valued at R4.47 billion.
Of the R4.3 billion raised, approximately R2 billion has reportedly been earmarked to fund current projects, leaving it with an additional R2 billion war chest for future deals. In an interview with Moneyweb, co-CEO Johan van Zyl explained that one of the major forces driving the listing was that the firm has been so inundated with deal opportunities, having looked at some 400 over the last 18 months, that it made sense to raise the additional capital. ARC Investments’ strategy will be to take sizable minority stakes in companies. For those companies, the opportunity to have a majority black-controlled long term investor with significant financial firepower and business-building expertise ought to be very compelling.