African Rainbow Capital (ARC) Investments faces the prospect of trading at a discount to its net asset value (NAV) when it lists on the JSE next week due to its complicated cost and management structure. The company – which mining magnate Patrice Motsepe is taking public after two years of quietly snapping up minority stakes in Alexander Forbes, EOH, Afrocentric Health, Rain and Santam – is listing with an initial portfolio worth R4.5bn, and seeks to raise R4bn in capital from investors at R8.50 per share. The net proceeds of the listing are expected to raise total assets to R8.4bn. ARC Investments, which has been set up as a holding company with its assets held in the ARC Fund, a private-equity structure, will charge a management fee of 1.7% a year on the average of the invested and closed net asset value of each quarter. Should the value of its assets stay the same by November, when the first management fee is due, investors are due to pay a steep R35.7m in fees. This excludes a 0...

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