Motsepe’s ambitious financial firm is born

15 April 2016

BILLIONAIRE businessman Patrice Motsepe took a step closer on Thursday to implementing his ambitious plan for a world-class, black-owned financial services giant with the official launch of African Rainbow Capital (ARC).

The company, which will focus on financial services and private equity investments, has a R10bn commitment from Ubuntu-Botho Investments, insurer Sanlam’s empowerment partner.

Ubuntu-Botho’s empowerment deal matured in 2013, and shareholders, which include women’s groupings and unions, were encouraged to reinvest the R17bn in value created. Ubuntu-Botho is majority-owned by Mr Motsepe’s family trust.

"ARC is 100%-owned by Ubuntu-Botho and reflects the diversification (from insurance to other financial services products)," said Mr Motsepe after the launch.

"What we are building is a world-class financial services giant."

The venture, jointly headed by former Sanlam CEO Johan van Zyl and former Sanlam Investments CEO Johan van der Merwe, seeks to build interests in banking, insurance, distribution, asset management, property, private equity and healthcare administration and management.

It has already — jointly with Sanlam — invested R200m in insurance broker Indwe Broker Holdings; and backed JSE-listed special purpose acquisition firm Capital Appreciation. Other investments include PayProp, an online rental property manager; and Metrofibre, which provides fibre-to-the-home broadband solutions.

Mr van der Merwe said ARC would house the nonfinancial services investments in its private equity fund, which was in the process of being set up.

Mr Motsepe said ARC was already partnering with black businesspeople, such as Matome Maponya Investments, to find opportunities to invest in.

One of them is former Polokwane mayor Freddy Greaver, who said at the event that he had identified about three opportunities "that we are really pushing for at the moment". Two of them were in SA and one abroad.

"Freddy (Mr Greaver) will bring the opportunities, and we will assess," said Mr van der Merwe. "If we decide to invest (we will) pay him a finder’s fee.

"We want to invest in really good businesses that will do well for our shareholders. We do not want to miss anything."

Barclays Africa CEO Maria Ramos also attended the event. She said she was there to support her "old boss" Mr van Zyl, who sat on Absa’s board before it was bought by British bank Barclays and renamed Barclays Africa.

Barclays is now selling down its 62.3% stake in the bank. Last week Bloomberg said a consortium of investors — led by the Public Investment Corporation — would meet with Barclays to discuss buying 10% of its shares.

Asked if there were a possibility of Mr van Zyl being back on the board perhaps as a Barclays Africa stakeholder, Ms Ramos referred further questions to him.

But Mr van der Merwe said ARC was not currently part of the consortium. "We are looking at what the possibilities are, but currently we are not part of the consortium."

He said if the deal was done in a certain way — such as Barclays selling some of the assets or splitting the retail bank and the investment bank — ARC could consider investing in the bank. ARC’s mandate was not to become a controlling shareholder, but an "influential" one, holding about 25% of a company’s shares, he said.

Reflecting its Sanlam roots, ARC has Mr Motsepe — a Sanlam deputy chairman — as chairman, while former Sanlam finance chief Machiel Reyneke joins Mr Van Zyl and Mr van der Merwe on the executive. Rejoice Simelane, a Sanlam director and CEO of Ubuntu-Botho, sits on the board. African Rainbow Minerals director Andrew Matube and Tom Boardman round out the rest of the board.