Proceeds will be ploughed into the group’s ARC Fund to beef up investment in companies including Rain and TymeBank and to finance possible acquisitions
African Rainbow Capital (ARC) Investments wants to raise R750m in a rights offer to finance the capital requirements of its ARC Fund’s existing portfolio companies and future possible acquisitions.
The company, which has investments in wireless data services company Rain and digital banking group TymeBank via the ARC Fund, said on Tuesday it will offer 150-million new ordinary shares at R5 apiece.
“The additional capital (after expenses of the rights offer and ARC Investments’ liquidity requirements) of approximately R742.35m, is expected to be sufficient to meet the medium-term funding requirements of the ARC Fund, considering that a number of companies in the portfolio are maturing and that the combined portfolio is expected to become more cash generative during the next 12 months,” the company said in a statement.
“In addition, the ARC Fund as part of its investment strategy will take advantage of opportunities to monetise some of its investments through partial or total disposal,” it added.
The offer price is a 7.3% discount to the 30-day volume weighted average price of ARC Investments’ share price on November 10.
Qualifying investors will receive 11.06579 rights offer shares for every 100 existing ordinary shares held on the record date of December 1. The rights offer opens on December 4 and closes a week later.
Business Day reported in October that the company, founded by billionaire Patrice Motsepe in 2015, is under pressure over its discount to net asset value (NAV), with a possible delisting from the JSE on the cards should the gap persist.
The discount refers to the difference between a company’s share price and its NAV — about 50% in ARC Investments’ case.
