Some investors were shocked on Monday to learn that a large proportion of the money being raised by African Rainbow Capital (ARC) in its forthcoming rights issue will go towards paying an outstanding management fee.

The company announced at its results presentation last week that it had advanced net asset value (NAV) by 2.1% to R9.54 per share for the year ending June, a figure well below its targeted goal of 16% over the medium term. The share price closed lower on the day of the results, representing a discount to NAV of more than 70%.

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