African Rainbow Capital (ARC) saw a significant increase in the company’s intrinsic value in the 2023 financial year and completed acquisitions of almost R2 billion. However, the company’s debt also skyrocketed by over 50% in the period.
ARC released its results for the year ended 30 June 2023 today, which revealed strong results for the holding company.
The company’s intrinsic net asset value (INAV) increased by 15.8% to R15.33 billion in the period, while its INAV per share grew by 13.4% to R11.41 per share.
However, cash in the ARC Fund decreased by 25.3% to R500 million, while the company debt increased by over 50% to R1.47 billion.
During the period, ARC made fair value gains of R2.48 billion and fair value losses of R331 million.
The company made acquisitions of R1.99 billion and disposals of R1.44 billion.
In the twelve-month period, ARC added to its stake in or acquired the Kropz Group, Tyme SA, ARCH Emerging Markets Partners, Tyme Group Africa, Upstream Group, and Linebooker.
The ARC Fund invested an additional R833 million in the Kropz Group during the year. The capital was primarily used to fund an operational cash flow shortfall at Elandsfontein resulting from a delay in the ramp-up of the Elandsfontein phosphate processing plant.
In addition, in August 2023, the ARC Fund advanced an additional R60 million loan from an existing loan facility to help fund operations at Elandsfontein. Furthermore, in September 2023, the ARC Fund approved an additional R250 million loan facility to Kropz Elandsfontein.
During the year, ARC Fund invested a total of R664 million in TymeBank and Tyme Global through Tyme SA Holdings and Tyme Group Africa Pte.
The funds invested enabled TymeBank to acquire Retail Capital, a leading fintech funder of small and medium enterprises, and raise capital for pre-series C.
The acquisition will support TymeBank’s offering to its business banking clients. It will also see Retail Capital’s lending expertise being combined with TymeBank’s deposit base and operations to serve a broader customer base, the company said.
The capital injection into Tyme Global will help fund their growth strategy into other markets, including GoTyme in the Philippines.
During the year, ARC Financial Services Holdings also invested R475 million in TymeBank and Tyme Global, with the ARC Fund‘s effective investments being R236 million.
The company disposed of or reduced its stake in Humanstate, ARC Services, ARCI, Gemcap, and Afrimat.
The ARC Fund disposed of its remaining Afrimat shares for a consideration of R486 million. ARC Fund achieved an overall internal rate of return of 27.7% on the Afrimat investment in the form of profits on disposals and dividends received.
After the reporting period, ARC Fund also invested R81 million in Rain in August 2023.