Empowerment investment holding company ARC Investments lifted its interim net asset value by 4.6% to R16 billion after benefiting from new investment and fair value gains as the focus shifts from acquisitive to organic growth.
ARC Fund’s key investments delivered strong performances – both TymeBank and Linebooker reached breakeven in the past six months and Philippines-based GOtyme attracted two million customers within 13 months, CEO Johan van Zyl said yesterday.
“Our portfolio is now more focused and streamlined. Our unlisted investments, which are only accessible through ARC Investments, have grown to 90% of the portfolio, and the top 12 investments now make up 89% of the fund’s value. Despite these changes, we have maintained good diversification, which has supported the portfolio’s performance in a challenging macroeconomic environment,” he said in a statement.
ARC Fund made no major acquisitions or disposals in the period, opting to reinvest in its existing portfolio, with a net investment of R585 million in telecoms, diversified financial services and agriculture.
The company recently disposed of non-core assets in the portfolio, reduced its exposure to listed shares, and increased holdings in the Financial Services and Fintech portfolio from 27% to 34% of the portfolio.
Van Zyl said high-growth technological innovation and future-focused investments now contributed more than half of the portfolio.
An outlier to this strategy was an additional investment in rock phosphate miner Kropz during the period, to repay debt to external parties, while the mine continued to ramp up operations.
The biggest asset representing 27% of the portfolio value was an interest in telecommunications business rain. The investment increased by R303m to R4.8bn. An increase in valuation was attributed to the business progressing past the significant net cash outflow point, and the subsequent launch of rainOne.
“The performance of rain’s mobile and fixed-wireless product, rainOne, has been pleasing and customer growth is encouraging,” said co-CEO Johan van der Merwe.
The second major asset, 20% of the portfolio value and valued at R4bn, is Tyme Group, comprising TymeBank and Tyme Global. TymeBank grew its customer base by more than 1.1 million customers in the six months to December to 8.5 million customers and activity per customer was growing.
Through partnerships with Pick n Pay, Boxer and TFG, TymeBank is the largest cash-in and cash-out network in the country. TymeBank achieved breakeven in December 2023, and sustained profitability should be achieved in the next few months.
Tyme Global is the holding company through which multi-country banks are being launched. GOtyme in the Philippines, expected to reach profitability towards the end of 2025, launched a Merchant Cash Advance product in November 2023 and was pursuing the acquisition of a Philippines-based payroll lender to leverage its low-cost and growing deposit base.
Tyme Global was in the contracting stages with country partners in Vietnam.
“The focus has shifted from mainly acquisitive to organic growth through the repositioning of the portfolio and capitalising on synergies among the underlying investments.
“We are pleased with the multiple value-adding transactions among investee companies within our Financial Services ecosystem. We already see significant value created from these alliances and the benefits of tapping the large client pools within the ecosystem to launch new products and services,” said Van Zyl.
He said the firm had similar aspirations for their agri ecosystem, as this type of value creation, together with their early-stage business now entering profitability, would be major value drivers in the portfolio over the short to medium term.
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