Motsepe's ARC could raise over R3bn in listing

Patrice Motsepe. (Photo: AFP)
Patrice Motsepe. (Photo: AFP)

Johannesburg - African Rainbow Capital, a South African financial-services firm started by Patrice Motsepe, the richest black South African, plans to raise more than R3bn in an initial public offering (IPO) of its investment-holding unit, according to people familiar with the matter.

ARC, as it’s known, will fold its non-financial services assets into the company and list the unit’s stock on the Johannesburg Stock Exchange (JSE), the people said, asking not to be named because the plans are private. The share sale, scheduled to take place by the end of September, may even raise as much as R5bn, they said.

The JSE placement may be followed by a secondary listing on A2X Markets, a new exchange part owned by ARC and due to start operating later this year in Johannesburg, two of the people said. ARC also plans to increase its stake in A2X to 25% from 20%, they said. African Rainbow co-CEO Johan van Zyl declined to comment.

Motsepe, 55, started ARC in April last year with access to as much as R17bn in capital and a view to build interests spanning everything from life insurance and healthcare services and administration to money management and banking. 

Motsepe, with a net worth of $1.8bn according to the Bloomberg Billionaires Index, is pushing efforts to spread the country’s wealth more equally between the black majority and the white minority, who still own most of the economy 23 years after the end of apartheid.

Economic headwinds

The IPO comes as South Africa’s economy is in a recession and political uncertainty heightened after President Jacob Zuma at the end of March fired his finance minister in a midnight cabinet purge.

Motsepe, a brother-in-law of Deputy President Cyril Ramaphosa, earned his fortune by buying and improving output from marginal gold mines operated by AngloGold Ashanti [JSE:ANG]. He expanded his company, African Rainbow Minerals [JSE:ARI], into platinum, copper, coal and iron ore and started Ubuntu-Botho Investments, ARC’s parent, in 2004. Ubuntu-Botho owns about 12% of Sanlam [JSE:SLM].

ARC aims to complete the IPO by the third quarter of this year and the investment-holding company will have an array of non-financial services businesses, such as its stake in EOH, which has interests in technology services, and Afrimat [JSE:AFT], a supplier of building materials, co-CEO Johan van der Merwe said in an interview with Johannesburg-based news service Moneyweb in March.

ARC will have a substantial stake in the investment-holding company and invest its own money into the unit, Van der Merwe told Moneyweb. It also plans to raise outside funds for ARC, he said.

Bidvest [JSE:BVT] founder Brian Joffe raised R2bn for the April listing of investment company Long4Life on the JSE, while EPE Capital Partners racked up a similar amount last year to help fund its private-equity arm.

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