African Rainbow Capital Investments (ARC), founded by Patrice Motsepe, on Friday provided a performance overview of its investments in the ARC Fund, its investment vehicle, which holds stakes including Rain and TymeBank, for the first quarter of 2021, which were on track despite Covid-19 disruption.
This followed its interim reporting period ended December 31 last year and published in March.
ARC said on Friday that Rain, the data-only mobile network operator, had experienced a surge in demand for its products and services in the 4G domain since the national lockdown in March 2020 and remained ahead of its original business case targets.
Expansion of its network footprint in terms of the Vodacom agreement was progressing well.
However, the business case had not anticipated the rapid growth in customer numbers, which had led to customer challenges being experienced and the management was aiming to resolve these problems.
ARC said Rain’s roll-out of 5G was progressing well and it had expanded its coverage almost sixfold since launching 5G roughly 18 months ago.
Meanwhile, digital bank TymeBank had significantly de-risked its funding and capital requirements by bringing on board two strategic funding partners during the period under review, Apis Partners and JG Summit Group to assist in increasing the scope of the business substantially, mainly with respect to its offshore expansion, ARC said.
TymeBank officially launched on February 26, 2019 and by March 2021 had 3 million customers, of which half were active banking customers.
“In some respects, TymeBank is tracking slightly behind its objectives, mainly because of the aftermath of the national lockdown as well as sustained economic pressures on consumers,” it said.
TymeBank was continuing to roll out its insurance offering with key insurance partners and was also preparing to launch an innovative retail credit product by early July, which “is expected to gain significant ground among consumers”.
As regards its listed investments, the share price of JSE-listed Afrimat, the industrial minerals, bulk commodity and construction materials mining company, had performed well, supported by strong financials.
ARC said during the period under review the ARC Fund sold 3.25 million Afrimat shares for R143 million and reduced its interest in Afrimat from 18.4 percent to 16.1 percent.
It said JSE-listed Alexander Forbes Group, of which the ARC Fund remained a strategic empowerment partner, would announce its financial results for the year ended March 30, 2021, today with “ongoing efforts to drive growth and strategic opportunities between the partnership.
As regards Rand Mutual Holdings, of which the ARC Fund held an effective 15 percent interest, the firm was implementing a new diversified growth strategy with the intention to build a larger and more profitable business over the next five years.
“There have been several executive management changes aligned to the RMH’s new strategic direction. Early operational results are in line with management’s newly adopted strategy.”
As regards GemCap, which makes equity investments in private and public companies domiciled in South Africa, following the recent buy-out of the minority interest in it by the ARC Fund, the underlying investments in the portfolio and management were in the process of being absorbed into “appropriate groupings” within the ARC Fund portfolio.
Meanwhile, Kropz, an emerging African phosphate explorer and developer that is listed on the Alternative Investment Market of the London Stock Exchange, had issued a financial update last month and it was expected that Kropz Elandsfontein would be commissioned in the fourth quarter of this year as previously communicated.
However, automotive firm Bluespec had managed good recovery post the initial national lockdown period in 2020 and business volumes continued to trend towards pre-Covid-19 levels with improved earnings and cash flows.
The share price was unchanged on Friday at R4.08.