Motsepe on expansion drive
ARC plans to close as many as 30 deals by June and is considering an initial public offering or starting a fund to attract capital for the next phase of the investment company’s growth strategy.
Meanwhile ARM is looking to expand mining operations in South Africa.
ARC is finalising 15 transactions and hopes to conclude another 15 in the first six months of this year, said Johan van Zyl, the co-chief executive officer of the South African investment company.
After using its own money for these deals, ARC aims to find partners who would invest their own cash for further expansion through avenues such as raising a fund or a share sale, Van Zyl said.
ARC had its official start in April last year and said its focus would be on South Africa with investments in a broad range of financial-services ventures. To date it has done 25 deals over and above its investment in insurer Sanlam and has spent about $500million, according to Van Zyl.
It is invested in companies including advisory firm Bravura Group, insurance broker Indwe Risk Services, mortgage originator Ooba and a property development in the Western Cape called Val de Vie, which has a polo estate that hosted Britain’s Prince Harry.
In the next six months many of ARC’s investments will be in “listed entities” and fairly big companies, Van Zyl said. The deals will focus mainly on insurance firms while also including industries such investment management, securities trading, property and health, he said.
Meanwhile, ARM is eyeing growth opportunities in South Africa at a time when foreign-owned firms are leaving because of rising costs, falling reserves and regulatory uncertainty. ARM’s executive chairman Motsepe founded ARM by buying up unwanted gold assets in the 1990s as South African companies looked to grow overseas. Now, with miners including Anglo American reducing their exposure to the country, similar opportunities are arising.
“We are interested in growing in South Africa,” Motsepe said last week. ARM is looking at “one or two” assets owned by Anglo American and “if we can make sufficient progress in the interest of both parties, we’ll make an announcement,” he said.
ARM probably won’t bid for Kumba Iron Ore, which is being sold by majority-owner Anglo American, even though it owns neighbouring mines, chief executive Mike Schmidt said last year. The company would instead seek to work together with Kumba on deals such as sharing resources and swopping land, Motsepe said.
It’s likely that ARM will keep its 14.7 percent stake in Harmony Gold Mining, Motsepe said. He’s positive on the outlook for bullion prices because of uncertainty stemming from Donald Trump’s US presidency and the UK’s decision to exit the EU. “We’re happy with Harmony,” he said. “It’s a long-term investment for us.”