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African Rainbow Capital Investments (ARC), a firm founded by billionaire Patrice Motsepe, said on Friday its increased stake in a debt review and recoveries business is expected to pay off in the current tough economic environment. It is also still focused on profitability in coming months for TymeBank, which has grown to over 7 million customers.
The company, valued at about R8.5 billion on the JSE, released an update for its third quarter to end March on Friday, saying TymeBank had a monthly acquisition rate of 188 000 customers, down about 6% from the last quarter of 2022, though its customer base has grown almost 13%.
TymeBank launched in 2019 made up just over a tenth of the group's more than R13 billion fund value at the end of its half-year to end-December, while mobile and data business Rain, which makes up more than a quarter, is still hitting its monthly targets.
Rain had acquired new spectrum in 2022, with the company now having launched its new "affordable" mobile offering - rainOne - which includes an unlimited 5G home Wi-Fi offering, as well as service offering for two phones.
"The company expects a significant number of existing customers to switch to this new offering and to acquire new customers," it said.
During the period, ARC also increased its shareholding in the Upstream Group from 25% to 49% following the exit of an existing shareholder, with that business providing debt review, rehabilitation, and recovery services.
"We believe that the higher level of unsecured credit lending, including the tough economic environment, will lead to more debt reviews and debt recoveries which translates into increased potential demand for services provided by the Upstream group of companies," it said.
ARC didn't provide a specific value for Upstream in its prior results, but it formed part of a group of business process outsourcing companies that make up just over 4% of its fund value, or about R600 million.
"The period under review was characterised by a challenging macro-economic environment featuring currency weakness, elevated inflation, rising interest rates and interruption of electricity supply, GDP growth is sluggish, and business and consumer sentiment remain suppressed."
"Despite the current economic climate, the performance of several portfolio companies has been resilient, and we continue to identify attractive investment opportunities," it said.
ARC's shares were unchanged on Friday morning, having lost just over 4% over the past one year.
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