JOHANNESBURG - Billionaire Patrice Motsepe looks set to extend his foothold in the financial services sector as he diversifies his wealth outside the mining industry.
Originally a mining magnate with $2.6billion (R37.45bn) of assets under his belt, Motsepe’s business empire has slowly extended to life insurance, healthcare, asset management, short-term insurance, property, banking, and general financial services.
Motsepe’s African Rainbow Capital (ARC), yesterday acquired more than R1bn worth of shares in Alexander Forbes, making it the single biggest shareholder in the pension fund administrator with a 33.9percent stake.
The black-owned and controlled ARC will also be Alexander Forbes’s black empowerment partner following US firm Mercer Africa’s exit.
Corporate and stakeholder relations executive Ainsley Moos said the investment was in line with ARC’s investment strategy.
“Our objective is never to become a majority or controlling shareholder. Our preference is to be a significant minority shareholder,” Moos said.
“Our preference is to acquire strategic shareholdings in the businesses we invest in and not to operate businesses.
"We leave the operations to the capable leadership and management teams to do.”
Motsepe’s investment holding firm already has a significant shareholding in insurance group Sanlam through Ubuntu-Botho Investments.
It also owns digital TymeBank and has stakes in telecoms operator Rain and Afrocentric.
But last year intimated disposing of its assets at technology firm OEH “at an appropriate time”.
Moos said the Alexander Forbes transaction would deliver positive outcomes for the country pertaining to how pension funds are managed.
“In particular, new regulation introduces lower fees as pension fund members are able to save inside their pension funds and thus have significant savings over the period of their working lives. This is a significant benefit,” he said.
“This approach is in line with ARC’s overall ethos of positioning itself as a business offering financial services at the most effective costs possible.
"We are also achieving this in banking with TymeBank as well as with our interest in the insurer Rand Mutual Assurance. This way we bring more people in the formal financial system and we believe this is good for the country.”
Moos said ARC would at an appropriate time liaise with Alexander Forbes about which representatives it would send to the asset manager’s board after two Mercer representatives stepped down following the transaction.
Alexander Forbes chief financial officer Bruce Bydawell dismissed suggestions that the company had been looking for another equity partner for a while now.
“No, we have not. Alexander Forbes has always had ARC as our strategic equity partner. We are happy that they have chosen to increase their stake,” Bydawell said.
Financial Sector Transformation Council chairperson Sibongiseni Mbatha said the transaction was significant as ARC had grown its footprint from an empowerment partner to a significant shareholding, especially when statistics indicate a regression in the ownership element.
“This also demonstrates that these deals are not overnight but take time. It comes with some element of patience. We wish this would multiply,” Mbatha said. “Ideally we would like to have an equivalent of Alexander Forbes being 100 black owned, but in circumstances you cannot have that, this comes in handy.”
ARC shares closed 0.24percent lower at R4.09 on the JSE yesterday.