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- African Rainbow Capital spent more than R1 billion on acquisitions in its half year to end-December.
- A big chunk went towards mining company Kropz, which has been a cash-hungry investment until it started selling bulk phosphate this January.
- But the holding company also disposed of several investments, increasing its exposure to unlisted companies instead.
- For more financial news, go to the News24 Business front page.
Patrice Motsepe's African Rainbow Capital (ARC) spent another R1 billion in its half-year to end-December acquisitions.
The group, which released its latest financial results on Thursday, said the spend went towards new fintech acquisitions and additional investments in TymeBank and Tyme Global to fund the purchase of Retail Capital. The group also invested an additional R49 million in its renewable energies joint venture, ARCH Emerging Markets.
The new acquisition was a minority stake in prepaid airtime provider, Optasia. Optasia provides airtime credit services to more than 88 million monthly customers in more than 30 countries.
But the biggest investment, R472 million, went to mining company Kropz, an investment that has proven to be very cash-intensive. Kropz Elandfontein phosphate mine experienced severe delays, and only achieved its first production at Elandfontein in March 2022.
Click here for African Rainbow Capital's share price data.
On Thursday, ARC said Elandfontein achieved its first bulk sales of approximately 30 000 tonnes of phosphate this January. It was expected to make a second delivery this week.
So, the bulk of that additional investment went towards funding Elandfontein's operational cash shortfall resulting from these delays. ARC said that now that the plant is continuously producing, its throughput and quality are steadily improving.
"Ongoing discussions are being held with various potential customers, and investigations continue into the development of additional value-add products. Substantial work has been done to gain a better understanding of the ore body and variability," it said in its results.
Kropz is ARC's third-largest investment after Rain and TymeBank. Rain doubled its profits, moving from R1 billion in earnings before interest, taxes, depreciation, and amortisation (ebitda) in its year to end February 2022 to over R2 billion in 2023.
Tymebank has attracted 6.2 million customers, while the bank signed more than 200 000 new customers per month in the last quarter of 2022. It has also successfully launched GOtyme in the Philippines.
But ARC has also been shedding some weight from its portfolio. The ARC Fund completed disposals of R1.3 billion in the six months to 31 December, which included its remaining 10.6% in Afrimat for R486 million. It achieved an investment return of 27.7%.
When ARC bought the cement company's shares, their price was below R20. This has now risen to around R50, and ARC sold a tranche at more than R60 at one point.
Other disposals included a divestment in payments device provider, Capital Appreciation. It also sold its stake in UK tech company, Humanstate, Payprop, and Mooiplaats Coal. ARC said all these disposals aligned with its long-term portfolio "rationalisation" and repositioning initiatives. The group is moving more towards unlisted investments, which have increased to 88% of its portfolio.
"Our efforts of streamlining the portfolio – combined with the fact that over 69% of the portfolio has reached break-even or is in a mature business stage – are increasing the attractiveness of the portfolio for investors," said ARC co-CEO, Johan van Zyl.
