ARC misses targets after tough year


ARC misses targets after tough year

Published Date: 2019-03-15 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

ARC misses targets after tough year

The investment group's portfolio was affected by the weak economy, with the value of its listed investments declining last year.

African Rainbow Capital (ARC) says strained economic conditions have taken their toll on most of the companies in its investment portfolio. And after a tough start to its financial year, it expects conditions to remain the same for the rest of its reporting period.

The investment company, founded by black entrepreneur Patrice Motsepe, has reported a 2c decrease in its intrinsic net asset value (INAV) to R9.21 per share between June and December. Its diluted INAV rose 1% to R9.21 per share. This is well below its medium to long-term expectation of 16% growth a year.

ARC's portfolio of listed investments was affected by the weak economy, with share prices down in the period under review. The ARC Fund devalued its interest in these investments by R83 million.

Its investments are separated into divisions that include Telecommunications; Mining, Construction and Energy; Business Process Outsourcing; Agriculture; Property; and Diversified Financial Services. It increased its shareholding in TymeBank to 36.7% ahead of the digital bank's launch and plans to raise its stake further. The intrinsic value of its portfolio grew by 8.2% to R8.57 billion.

About half of the ARC Fund's portfolio is invested in early-stage businesses such as TymeBank, network operator Rain, and plant-nutrient producer Kropz Plc and its Kropz Elandsfontein phosphate mine. While it had made promising progress with these initiatives, it said it would take time for them to mature.

During the year, it also acquired an effective 15% stake in Rand Mutual Holdings, part of insurance company Rand Mutual Assurance.

Profit for the period declined by 83% to R77 million from R462 million.

Its shares closed 4% up at R4.99.

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