Patrice Motsepe's ARC continues to bet on SA: 'Still huge opportunities here'
Patrice Motsepe’s African Rainbow Capital (ARC) has posted its results for the year ended 30 June 2021.
The company's intrinsic portfolio value increased by 16.3% from R10.55-billion (June 30, 2020) to R12.27-billion at the end of June this year.
ARC's investments include a majority stake in phosphate explorer Kropz and a 100% interest in telecommunications provider Rain.
Bruce Whitfield recounts how he asked mining magnate Motsepe a few years ago why the company was continuing to invest in South Africa while many other concerns wanted to exit the country.
He responded "Well, my future's here; my children's future is here. Somebody has to invest in that future."
Whitfield interviews Johan van der Merwe, the co-CEO and Executive Director of ARC.
Continued investment must come at a price comments Whitfield, with the market price of the company's assets substantially lower than the recorded underlying value.
"SA Inc. is dramatically undervalued at present."
Van der Merwe notes that ARC has quite a few investments which are early-stage investments.
Rain - even though they had a bumper 18 months because of Covid and one of our few investments that had a tailwind because of it... people needed data...Johan van der Merwe, Co-CEO - African Rainbow Capital
Then we have TymeBank... the phosphate mine Elandsfontein on the West Coast which has been draining cash... coming into production by the end of this year...Johan van der Merwe, Co-CEO - African Rainbow Capital
So there is some light at the end of the tunnel in terms of our early-stage investments beginning to generate positive cash flows.Johan van der Merwe, Co-CEO - African Rainbow Capital
Van der Merwe adds that it's also important for ARC to selectively divest over time.
"I think every time that we have sold something, we proved to the market that you don't have to sell it at half the value... in many cases it's at more than the value that we show."
He notes that while ARC sees itself as a South African investment company, this doesn't mean it won't invest elsewhere.
We follow our investments here. For instance if you look at TymeBank, they're starting a bank in the Philippines now...Johan van der Merwe, Co-CEO - African Rainbow Capital
We believe here are huge opportunities still in South Africa and difficult times... present opportunities at the end of the day.Johan van der Merwe, Co-CEO - African Rainbow Capital
Listen to the conversation below: