African Rainbow Capital’s investment in TymeBank on track for profit

African Rainbow Capital chairman, Patrice Motsepe. SUPPLIED.

African Rainbow Capital chairman, Patrice Motsepe. SUPPLIED.

Published Jun 10, 2024


African Rainbow Capital Investments (ARC) said that TymeBank, one of the startup online banks in South Africa, was expected to achieve profitability this month after breaking even in December 2023, positioning it for further growth.

ARC said Friday in an investment update for the third quarter to March 31 that TymeBank subsidiary GoTyme Bank, which operates in the Philippines, was projected to reach break-even in the fourth quarter of 2025.

“Retention rates and transactional activity continue to strengthen in both markets,” ARC directors said.

They said TymeBank was expanding its SME lending proposition through its merchant cash advance product, becoming one of a growing number of financial institutions in South Africa now specifically targeting this market, and Tymebank was also expanding into unsecured consumer lending by leveraging its growing deposit base.

GoTyme Bank recently acquired 100% of SAVii, a salary-based lender in the Philippines. Additionally, GoTyme Bank shareholders increased their stake in the bank, resulting in Tyme Group's economic interest exceeding 50%. These developments, coupled with strong growth, boded well for GoTyme Bank's future, ARC said.

The Tyme Group has 12.4m customers across South Africa and the Philippines, with 9.2m TymeBank customers and 3.2m GoTyme Bank customers. The group onboards about 450 000 new customers monthly, with 250 000 for GoTyme Bank and 200 000 for TymeBank.

The Tyme Group’s annualised gross revenue run rate is $175m, while the annualised net operating income was at $110m. The combined deposit base is $600m, with a $165m lending portfolio.

Another ARC investments that continued to grow is the internet data company rain.

“RainOne continues to experience steady month-on-month growth... A notable trend is the successful migration of customers from legacy plans to newer offerings, reflected in improved collections and retention rates. Prioritising customer engagement and service has yielded positive customer sentiment,” said ARC.

They said rain had reached its monthly financial targets.

Meanwhile, the Crossfin fintech portfolio delivered strong year-on-year financial performance. The businesses were operating in a tough trading environment, due to the continued strain experienced by consumers and the unpredictability of load shedding for merchants.

In May 2024, Lesaka Technologies acquired Adumo, a Crossfin portfolio company, for R1.6 billion in cash and shares. ARC had opted to receive Lesaka shares.

Capital Legacy, an estate administrator in which ARC is also invested, maintained “impressive growth.” It was expanding resources to maximise the partnership with Sanlam, following Sanlam's 26% investment and Capital Legacy's acquisition of the entire Sanlam Trust business.

ARC is also invested in phosphate mining firm Kropz plc, which is listed on the Alternative Investment Market in London.

ARC said Kropz Elandsfontein faced challenges in increasing production, but its management identified issues of ore variability, production bottlenecks, liberation and flotation, and teams were actively working to address these challenges and achieve profitability.

Kropz sold 80 771 tons of phosphate concentrate in the quarter. Production trials of the Nanophos product had begun, with several small sales completed. The installation of an additional centrifuge was complete and being tested, with the aim of stabilising and boosting production levels from the third quarter onwards.

The ARC Fund continued to support the project and Elandsfontein's operational ramp-up, providing an additional R113m in capital during the quarter.