Johannesburg - African Rainbow Capital, a South African financial-services
firm started by Patrice Motsepe, the richest black South African, plans to
raise more than 3 billion rand ($234 million) in an initial public offering of
its investment-holding unit, according to people familiar with the matter.
ARC, as it’s known, will fold its non-financial services
assets into the company and list the unit’s stock on the Johannesburg Stock
Exchange, the people said, asking not to be named because the plans are
private. The share sale, scheduled to take place by the end of September, may
even raise as much as 5 billion rand, they said.
The JSE placement may be followed by a secondary listing on
A2X Markets, a new exchange part owned by ARC and due to start operating
later this year in Johannesburg,
two of the people said. ARC also plans to increase its stake in A2X to 25
percent from 20 percent, they said. African Rainbow co-Chief
Executive Officer Johan van Zyl declined to comment.
Read also: AMSA in talks to raise R3.5bn
Motsepe, 55, started ARC in April last year with access to
as much as 17 billion rand in capital and a view to build interests
spanning everything from life insurance and healthcare services and
administration to money management and banking.
Motsepe, with a net worth of $1.8 billion according to the
Bloomberg Billionaires Index, is pushing efforts to spread the country’s wealth
more equally between the black majority and the white minority, who still own
most of the economy 23 years after the end of apartheid.
Economic Headwinds
The IPO comes as South Africa’s economy is in a
recession and political uncertainty heightened after President Jacob Zuma at
the end of March fired his finance minister in a midnight cabinet purge.
Motsepe, a brother-in-law of Deputy President Cyril
Ramaphosa, earned his fortune by buying and improving output from marginal gold
mines operated by AngloGold Ashant. He expanded his company, African
Rainbow Minerals, into platinum, copper, coal and iron ore and started
Ubuntu-Botho Investments, ARC’s parent, in 2004. Ubuntu-Botho owns about
12 percent of Sanlam, Africa’s
second-largest insurer.
ARC aims to complete the IPO by the third quarter of this
year and the investment-holding company will have an array of non-financial
services businesses, such as its stake in EOH Holdings, which has
interests in technology services, and Afrimat, a supplier of building
materials, co-CEO Johan van der Merwe said in an interview with
Johannesburg-based news service Moneyweb in March.
ARC will have a substantial stake in the investment-holding
company and invest its own money into the unit, Van der Merwe told Moneyweb. It
also plans to rise outside funds for ARC, he said.
Bidvest Group founder Brian Joffe raised 2 billion rand for
the April listing of investment company Long4Life on the JSE, while EPE
Capital Partners racked up a similar amount last year to help fund its
private-equity arm.
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