JSE-listed investment holding company African Rainbow Capital (ARC) Investments increased its intrinsic net asset value (INAV) per share by 8.5% to R12.38 a share during its financial year to the end of June 2024 owing to new investments and net fair value gains.

The group's INAV increased by 21.5% to R18.6-billion, which comprises an increase in equity through a rights issue of R750-million and a net portfolio gain of R2.67-billion.

“TymeBank and Linebooker approached the important milestone of break-even in the past year and generated fair value gains of R1.18-billion from TymeBank and R79-million from Linebooker,” the company said in a statement on September 16.

TymeBank’s customer base increased to 9.5-million and Philippines-based GOtyme attracted a record 3.6-million customers within 18 months since its launch. Tyme Group’s recent pilot in Vietnam is also performing well, and they have announced plans to enter Indonesia before the end of 2024, ARC Investments said.

Linebooker has become one of the largest transport businesses in the country, with an ecosystem of more than 25 000 trucks, while not owning the trucks. The company recently signed two significant international clients, which will likely double the value of the business in the next year.

Additionally, seven-year-old Rain generated earnings before interest, taxes, depreciation and amortisation of R2.5-billion. It realised a fair value gain of R598-million, ARC said.

Meanwhile, ARC Investments celebrated standout achievements by Alexforbes, Capital Legacy and its agricultural portfolio, which exhibited high growth and high profitability, the group added.

Further, the ARC Fund made no sizeable acquisitions or disposals during this period. It opted to reinvest in its existing portfolio, with a net investment of R1.2-billion in its key investments in telecommunications, diversified financial services, agriculture and mining.

The ARC Fund also continued to dispose of assets in its diversified portfolio, reduced its exposure to listed shares, and increased its holdings in the financial services and fintech portfolio to 33% of the portfolio from 31% as part of its strategy in the past year.

“The ARC Fund has systematically been increasing its exposure to more futuristic businesses in fintech, sustainable resources, renewable energy and new metals. High-growth, technological innovation and future-focused investments now contribute more than half of the portfolio,” the listed group said.

The ARC Fund also made an additional investment in phosphate developer Kropz during the period to repay debt to external parties while the mine continued to ramp up operations.

“We have successfully streamlined our portfolio, with the top 12 investments now comprising 90% of the fund’s value. More than 87% of the portfolio is contributed by mature and high-growth investments, which will continue to improve earnings visibility,” said ARC co-CEO Johan van der Merwe.

“Less than 13% of the portfolio remains in the early-stage category that may require larger capital outlays,” he said.

Further, the financial services ecosystem developed between investee companies has generated considerable synergies that are being realised through collaboration.

These synergies include scale benefits, cost savings, reductions in cost per member, improved client experience, enhanced distribution capacity and larger client pools, he noted.

Recently, the ecosystem has benefited Sanlam, Alexforbes, Retail Capital, TymeBank, Capital Legacy, Crossfin and Ooba.

“We are particularly pleased with how our vision of developing the synergy and networking potential among portfolio companies is coming to fruition. For the first time, we see an ecosystem of businesses leveraging off each other and creating significant value by tapping the large client pools within the ecosystem to launch new products and services,” said ARC co-CEO Johan van Zyl.

“We have similar aspirations for an agriculture ecosystem, as we see this type of value creation, together with our early-stage businesses now entering profitability, to be major drivers of value in the portfolio over the short to medium term,” he highlighted.

Meanwhile, ARC Investments announced a transaction with Sanlam. The parties aim to restructure the capital structure of the financial services portfolio, and Sanlam aims to acquire a 25% stake in ARC financial services portfolio, including the interest in Tyme Group.

“In addition to further cementing the symbiotic relationship between ARC and Sanlam, this transaction will allow us to continue to benefit from the high-growth investments in ARC financial services portfolio while sustainably reducing the demands on our capital to fund their growth,” said Van Zyl.

Meanwhile, the ARC Fund's cash and funding position has improved notably compared with 2023, now that the significant capital drawdowns by the early-stage entities have mostly ceased.

The R1.3-billion cash ARC Investments receives from the Sanlam/ARC financial services portfolio transaction will pay off some debt, fulfil obligations and improve available cash resources.

“ARC Investments remains receptive to promising investment opportunities and, with its growing resources, becomes increasingly well-equipped to capitalise on them.

“The group sees welcome signs of recovery in the business environment, with favourable green shoots indicating a more robust economic landscape ahead,” Van Zyl said.