The R11 billion JSE-listed company without a CEO or executives

African Rainbow Capital Investments (ARCI), listed on the JSE, is unique in that it does not have a CEO, full-time CFO, or other executives.

The company did appoint a part-time CFO, Karen Bodenstein, in accordance with the JSE listing approval.

ARCI is incorporated in the Republic of Mauritius, and its principal activity is to act as an investment pooling vehicle.

It invests indirectly as the only limited partner in the ARC Fund, which in turn invests in a diversified portfolio of unlisted and listed investments.

ARC Investments is 51.1% owned by African Rainbow Capital Proprietary Limited (ARC), which is in turn 100% owned by Ubuntu-Botho Investments Proprietary Limited (UBI).

ARC, not to be confused with ARCI, is a fully black-owned and controlled company founded in 2015 by billionaire Patrice Motsepe.

ARC is a 100% subsidiary of UBI, a black-owned and controlled company that was established in 2004.

ARC’s board members include non-executive chairperson Patrice Motsepe and executive directors Johan van Zyl, Johan van der Merwe, and Refiloe Nkadimeng.

Johan van Zyl is the co-CEO of African Rainbow Capital and Ubuntu-Botho Investments, and Johan van der Merwe is the co-CEO of African Rainbow Capital.

Refiloe Nkadimeng is the CFO for Ubuntu-Botho Investments and African Rainbow Capital.

The ARC Fund is an ‘en commandite’ partnership managed by its general partner, UBI GP Pty Ltd, where Van Zyl and Van der Merwe serve on the board.

UBI GP is a wholly owned subsidiary of Ubuntu-Botho Investments Pty Ltd.

Interestingly, while ARCI has no executives, it has regular investor engagements.

During these engagements, Van Zyl, Van der Merwe, and Nkadimeng represent ARCI and answer questions on behalf of the listed entity.

ARC acts in this capacity on behalf of ARCI, as is contracted in the administration agreement between it and the general partner, UBI GP Pty Ltd.

ARCI explained that it was one of the requirements as per the JSE listing approval process.

Despite disclosing it in its pre-listing statement, many stakeholders are unaware that ARCI does not employ the executives and that they are not directors at the company.

It is unique for a JSE-listed company not to have a chief executive officer, full-time chief financial officer, or executives.

ARCI created a strange situation where the listed entity outsources its management to an unlisted entity, which does not have the same regulatory oversight.

Although this is not an unusual construct in private equity, listed companies without a chief executive or management team are hard to find.

This has interesting consequences. For example, ARCI does not have the typical remuneration report for its executive directors for shareholders to scrutinise.

This is one reason the JSE Listing Requirements stipulate that the issuer must have an appointed chief executive officer and a chairman.

Although ARCI has a chairman, Mark Olivier, it does not have a CEO as required by the JSE listing requirements.

ARCI told Daily Investor that the JSE fully approved the company’s governance structure at the time of listing.

The JSE specifically approved the fact that it does not need a CEO and approved that it has a part-time CFO.

ARCI said having an executive management team is unnecessary due to the nature of the vehicle not being an operating company.

It explained that ARCI is merely a capital pooling vehicle which then invests in the ARC fund. 

The investments are actively managed by the General Partner of the ARC Fund, UBI GP and this is where individuals are employed and where the two co-CEOs sit on the board.

African Rainbow Capital Investments’ structure

The chart below provides details about the ARCI business structure.