Patrice Motsepe’s ARC Investments falls short of targets
The group says the weak economy, a decline in the share prices of its listed investments and its bets in early-stage businesses affected its net asset value
Patrice Motsepe’s African Rainbow Capital Investments (ARC Investments) said its intrinsic net asset value edged up just 1% in the six months to end-December to R9.6bn, well below its medium-term target of 16% growth a year.
The group said this was because of the weak economy, a decline in the share prices of its listed investments, and its bets in early-stage businesses such as network operator Rain and financial services start-up TymeBank.
ARC Investments said its net profit in the interim period fell to R77m, from R462m a year before.
While the value of its investment in Rain increased by 9% to R2.3bn, the group said it had been forced to write down the value of one of its business process outsourcing ventures, Bluespec, by R209m. The carrying value was reduced to R300m.
Bluespec is focused on the short-term insurance value chain and luxury and exotic vehicle sales.
ARC Investments said the business had been affected by the downturn in the motor industry, and lower insurance payout ratios, which had affected the motor body repair shops and tow trucking businesses owned by Bluespec.
On the other hand, Rain’s growth prospects “remain optimistic”.
“Revenue growth has been encouraging and significant progress has been made to further improve on network performance and stability,” ARC Investments said.
Rain said recently it was in advanced talks with Chinese electronics manufacturer Huawei to launch 5G connectivity.
Meanwhile, ARC Investments said it still planned to sell its shares in troubled technology services company EOH.
ARC Investments said its investment in JSE-listed EOH “is held for sale and will be disposed of at an appropriate time”.
EOH’s shares have fallen by more than two-thirds over the past 12 months on governance concerns.