African Rainbow Minerals (ARM) executive chairperson Patrice Motsepe. Photo: Simphiwe Mbokazi

JOHANNESBURG - African Rainbow Capital Ltd., the South African financial-services firm started by billionaire Patrice Motsepe, plans to raise 4 billion rand ($303 million) by selling shares in its investment unit to selected investors. 

The sale will be followed by a listing on the Johannesburg Stock Exchange next month that will give African Rainbow Capital Investments a market value of about 8.5 billion rand, including 2 billion rand in cash for future purchases, co-Chief Executive Officer Johan van der Merwe said in an interview in Johannesburg on Thursday.

The Public Investment Corp., Sanlam Private Wealth and GIC Pte Ltd., Singapore’s sovereign wealth fund, will be taking up 2.1 billion rand of shares and another 1.9 billion rand will go to selected investors, he said. The investment firm is also planning a secondary listing on A2X Markets Ltd., a new exchange in Johannesburg in which it already holds a 20 percent stake.

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Motsepe, the richest black South African, invested in insurer Sanlam Ltd. more than a decade ago. After his investment grew 10 fold, he asked Van der Merwe and the former chief executive officer of Sanlam Johan van Zyl to help him start an investment company focused on boosting black participation in the economy. Having officially started ARC in April last year, it has made 5.5 billion rand in investments with 2 billion rand of that going into financial services ventures. 

African Rainbow Capital Investments’ pre-listing statement is due to be published on Aug. 28 with the listing scheduled for Sept. 7, according to van der Merwe, who was previously head of Sanlam Investments.

‘Tremendous Opportunities’

The listed entity African Rainbow Capital Investments, which will be 51 percent held by ARC, is targeting returns of 20% and doesn’t plan on paying out dividends while it’s still growing, van der Merwe said. There’s a pipeline of potential investments and the company will consider further share sales if it needs to raise more cash to buy into new
opportunities, he said. 

Related article: Patrice Motsepe to raise more than R3 billion

In the next year, the firm will be exploring investments in industries including agriculture, banking and telecommunications, according to van der Merwe. The focus will remain on South Africa where, despite a recession, there are “tremendous opportunities,” he said. To date, ARC has invested in companies including advisory firm Bravura Group, insurance broker Indwe Risk Services Pty Ltd., mortgage originator Ooba Pty Ltd. and a property development in the Western Cape called Val de Vie, which has a polo estate that hosted Britain’s Prince Harry.