Leading empowerment investment holding company African Rainbow Capital (ARC) today announced it has obtained regulatory approval for the acquisition of 90% of TymeDigital by Commonwealth Bank SA, a registered bank that is set to enter the local banking sector with a focus on innovation and technology.
TymeDigital was majority owned by the Commonwealth Bank of Australia (CBA), a leading banking group in its core markets of Australia and New Zealand.
The Prudential Authority of the South African Reserve Bank granted approval to ARC for the transaction. ARC previously held a 10% shareholding in TymeDigital and the bank is now 100% owned by ARC and its subsidiaries. The transaction is done for an undisclosed consideration.
Now that regulatory approval is in place, TymeDigital will change its name to TymeBank when it officially launches to the South African public. The exact details of the public launch will be communicated at a later stage.
The transaction comprises TymeDigital in South Africa and the related intellectual property and patents. Following the approval for the transaction, ARC may consider introducing new shareholders in the current structure, which may include management.
TymeDigital is still on track to launch its banking proposition this year. The offering will provide affordable and accessible banking services through a growing network of partners, including retailer Pick n Pay as its leading distribution partner in over 700 Pick n Pay and Boxer stores.
Targeted client segments include the unbanked and underserved clients as well as small and medium enterprises. TymeDigital uses cutting-edge technology at its self-service kiosks to enable authentication of individuals and verification of address details. The technology allows customers to open a paperless bank account for free in less than 5 minutes. The fees on this account will be the lowest in the market.
ARC will consider introducing client pools in both its financial and non-financial services investee companies to the bank’s spectrum of services.
ARC is 100% owned by Ubuntu-Botho (UB), a broad-based black economic empowerment entity, of which business leader Mr Patrice Motsepe is the anchor shareholder. Motsepe is the Chairman of the board of directors of UB as well as ARC. UB also owns a 13,5% shareholding in Sanlam, the diversified financial services group, which makes it the largest single shareholder in Sanlam.
Says Motsepe: “Today marks a very special day in our lives as business people and as South Africans. The South African economy is one step closer to being inclusive for all South Africans as we now have the first black-owned and controlled commercial, retail and digital bank in South Africa.
“Our vision at Ubuntu-Botho and African Rainbow Capital is to build world class businesses and to take our communities along on the journey. We believe TymeDigital will create immense excitement among South Africans who will soon be able to open a bank account through our digital kiosks in Pick n Pay and Boxer stores.”
Dr Johan van Zyl, co-CEO of ARC, says: “A key feature of TymeDigital’s offering to all South Africans, and in particular people who are at the bottom of the pyramid income earners, is that it will make affordable access to financial services products a reality. This will be coupled with elements of financial education, which from the outset has been a key objective of TymeDigital.”
Van Zyl adds: “Lowered transaction costs and fees make it possible for more people to open a bank account and therefore participate in the economy. If we can achieve this, we can build a truly inclusive economy while at the same time deliver a satisfactory commercial return to shareholders. TymeDigital will primarily target underserved consumers who have bank accounts but need greater transparency and access to a variety of products and services. TymeDigital will ensure that the average South African is now able to access a bank account with related products and services quickly and easily and at a cost significantly lower than those of our competitors.”
TymeDigital CEO Sandile Shabalala says: “ARC is establishing itself as a strong brand in the financial services and broader investment world. With ARC’s visionary leadership and support, we will become a formidable force in the South African market and disrupt the local banking sector. We will offer South Africans of all walks of life something different that will significantly lower banking fees and charges. The TymeDigital team has been working hard to get to this point and we are really proud that this moment has arrived. Following today’s announcement, we remain focused on officially launching the bank to the South African public.”
ARC has as a strategic objective to invest in four main subcategories of financial services, namely insurance, asset management, specialist financial services and banking. Furthermore, the objective is to drive synergies among the various companies in these four subcategories to enhance value creation for stakeholders, and in particular shareholders. Control of a bank has always been a critical step in this direction.
ARC has made more than 40 investments in portfolio companies, in both financial services and non-financial services investee companies since its formation in 2015. In total, these investments represent an intrinsic portfolio value of more than R9.7 billion. The company has available cash resources of about R1.5 billion to make further acquisitions over the short to medium term.
