Motsepe's African Rainbow Capital acquires 25% stake in estate planning firm

Billionaire Patrice Motsepe's empowerment investment holding company African Rainbow Capital on Tuesday announced its acquisition of a 25% shareholding in specialist financial services firm Capital Legacy for an undisclosed amount.

The transaction allows ARC to complement its existing financial services investments and facilitate synergistic opportunities between Capital Legacy and companies in which ARC is invested, according to a statement.

Capital Legacy has been operating since 2012 and since inception has drafted more than 200 000 wills. The firm currently assists more than 5 000 individuals per month with the drafting of their wills.

It says this is due to having identified improved, efficient and cost-effective solutions to will drafting, estate planning and execution.

"We got to the point where we needed a big brother to provide us with BEE credentials. We needed a partner who has scale and the means to help fund our growth. On top of that ARC brings massive credibility," Capital Legacy founder and CEO Alex Simeonides told Fin24.

He said Capital Legacy met with a few suitors before deciding on ARC, among other reasons because of its hands-off approach. It took about nine months to sort out the deal.

"For us the next step now that we are part of the ARC stable is to see how we can take our fiduciary services into other ventures as well. For instance, how we could help TymeBank [of which ARC is a shareholder] clients to have their wills done," said Simeonides.

"From my personal point of view, the most important aspect is that we now have a credible institution with proper backup behind us to show we can deliver on promises we make."

Fin24 reported in June that, since TymeBank was launched, more than 400 000 clients have signed up for bank accounts.

According to the statement issued on behalf of ARC and Capital Legacy, only one in four people in South Africa has a valid will.

"Inefficiencies in estate planning could result in as much as 30% of the value of the estate being used to cover costs. Furthermore, execution could take years and not months to conclude in the absence of adequate planning," according to the statement.

"This poses several financial risks to the dependants of the deceased. These include financial concerns, such as a lack of liquidity to settle debts, estate taxes and other legislated costs relating to the administration of the estate."

In the view of Simeonides, Capital Legacy has demonstrated that its business is uniquely positioned to offer ordinary people a service from which they can benefit significantly.

"Our solutions are geared towards effectively managing legislated costs associated with an estate," he said.

According to ARC co-CEO Johan van der Merwe, Capital Legacy "fits neatly into the eco-system of financial services businesses that we assemble. These businesses would leverage from one another and create synergies for other businesses within our holistic approach."

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