Big announcement about billionaire Patrice Motsepe’s company that owns large stakes in Rain and Tymebank

Patrice Motsepe’s African Rainbow Capital Investments (ARCI) has released details about a plan to delist and re-domicile the company.

Among other investments, ARCI holds a 21.76% stake in mobile network operator Rain, and a 15.9% stake in Tymebank. The entire ARC group has an overall 42.3% stake in Tymebank.

ARCI is incorporated in the Republic of Mauritius and trades on the Johannesburg Stock Exchange (JSE).

If the proposed deal goes through, the company will be delisted from the JSE and re-homed in South Africa.

“To facilitate the delisting of ARCI, ARC and ARC SPV have offered to acquire all the issued ordinary shares in ARCI not already owned by ARC and ARC SPV,” the company stated.

ARC and ARC SPV have offered to buy out shareholders at a price of R9.75 in cash.

In its notice to shareholders, ARC said the offer represents a 12.6% premium on the previous closing price of R8.66 per share and a 21% premium over the 30-day volume-weighted average price of R8.06 per share.

It also noted that this was a discount of 22.8% to the net asset value per share as set out in the ARCI interim results announcement published on Tuesday.

“The public shareholding in ARCI is limited, as all or almost all of the shareholders are South African and there is limited liquidity in the ARCI shares,” the company explained in its rationale for the move.

“The ARCI share price also does not reflect the true value of the investment in the ARC Fund and trades at a discount to the net asset value of the ARC Fund, meaning that investors in ARCI are not receiving the true value of their investment.”

ARC also explained that when it listed ARCI, the rationale for incorporating in Mauritius was its business-friendly environment.

This included the tax treaties Mauritius has in place to attract capital from investors outside South Africa and facilitate investments outside South Africa if required by international investors.

“This strategy has not materialised to the extent expected. ARCI attracted very limited international funding, and no funding due to the Mauritian structure,” the company said.

“Also, ARCI is mainly invested in South African companies. The cost to operate and oversee the affairs and operations of ARCI in Mauritius has become increasingly expensive,” it continued.

“In addition, changes to tax legislation since the ARCI listing, have resulted in tax inefficiency for South African resident ARCI shareholders vis-à-vis the underlying South African investments.”

Timeline for ARCI’s delisting and move

ARCI provided the following key dates for the transaction.

In addition to the below deadlines and conditions, ARCI’s re-domiciliation is conditional on all regulatory approvals required under the South African Companies Act and the Mauritian Companies Act.