Johannesburg - Billionaire Patrice Motsepe's new firm African Rainbow Capital Investments (ARC) has attracted so much interest among prospective investors that he decided to issue another 35 million shares.
ARC will make its debut on the JSE on Thursday.
The company says in a statement that these shares will be on sale for R8.50.
Environmentalists in the Western Cape, however, question whether investors are indeed aware that it could take some time for one of ARC's largest investments to start contributing to company earnings.
According to ARC's pre-listing statement, it acquired a 25% stake in the Elandsfontein mining company for R350m. Elandsfontein is not listed and according to the statement, its focus is on "agriculture and food production".
ARC says the intrinsic value of its stake in Elandsfontein amounts to R423m.
ARC will lend R338m to Elandsfontein, as part of the original transfer to the new portfolio. The firm expects to earn R33.2m in interest when the loan is repaid. The loan is unsecured and there are no fixed terms for repayment.
Walter Anderson, senior partner of law firm Cullinan & Associates, says it is interesting that the pre-listing statement does not refer to "any legal action" Elandsfontein might be facing, even though it is the largest asset in ARC's portfolio.
"As it stands, the listing will continue without warning prospective investors about the uncertain future and the unsustainability of the company's most valuable unlisted asset."
Elandsfontein, a subsidiary of Kropz, is a phosphate mine that is being developed near Langebaan on the West Coast. Although ARC says in its listing documents that the mine is currently in a "care and maintenance" phase, Kropz earlier in August indicated that it would postpone Elandsfontein's commissioning for a "long time".
One of the reasons the company cites for this decision is the "long delay in the issuing of the mine's water use licence".
Kropz confirmed on April 25 that it had received the integrated water use licence for the mine and that it was in discussions with the Department of Water and Sanitation on how the mine would apply the licence.
The West Coast Environmental Conservation Association (Woba), however, appealed against this decision and has turned to the supreme court to force the mine to stop to depleting the Elandsfontein aquifer, Netwerk24's Elise Tempelhoff reported this week.
Woba chairperson Carika van Zyl said the fact that they have filed an appeal against the water licence "means it is suspended until the Water Tribunal has made a ruling. In the meantime, the mine may not use water."
Memory Johnson of Russell and Associates, Elandsfontein's public relations company, confirmed that the mine continued to pump water.
Motsepe's Business Empire
Apart from chairing ARC, Patrice Motsepe is also the chairperson of African Rainbow Minerals (ARM).
ARM's market value is currently around R24bn. The mining company and other assets it has an interest in produces gold, iron, basic metals and platinum.
Motsepe is also non-executive chairperson of Harmony Gold and deputy chairperson of Sanlam. He is also the president and owner of the Mamelodi Sundowns Soccer Club.
According to Forbes, Motsepe is Africa's top billionaire in dollar value, with a personal value of $1.85 bn (R23.9bn).
ARC Investments said in August that it would offer R4bn shares in an initial public offer that would give the company a market value of around R8.5bn. An interest of about 25% will be sold to three key investors - GIC in Singapore, the Public Investment Corporation and Sanlam Private Wealth.
ARC says in a statement the additional shares it now wants to issue will increase the "gross yield of the offering from R1.9bn to R2.2bn".
In addition to the interest in Elandsfontein, its nine other largest investments, based on the percentage of the intrinsic value they represent, are:
- Rain: A 20% stake in this broadband provider providing fast internet connections. It represents 31% of its portfolio.
- Afrimat: An interest of 18.4% in the listed construction company. It represents 12% of its portfolio.
- EOH: An interest of 1.7% in the listed information technology group. It represents 6% of its portfolio.
- Alexander Forbes: An interest of 4.9%.
- BKB: An interest of 20% in the agricultural company.
- Acorn Agri: An interest of 15% in the agricultural company.
- Afrigem Payprop: An interest of 46.4% in the information technology group.
- Val de Vie Investments: An interest of 20% in the property developer.
- Humanstate: An interest of 10% in the information technology company.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.