ARC Investments IPO targets R4bn valuation

Holding company will sell more than 471 million shares at R8.50 each.

ARC Investments, a holding company co-founded by South African mining tycoon Patrice Motsepe, said it will sell shares worth R4 billion ($306 million) in an initial public offering that values the company at R8.5 billion.

African Rainbow Capital Investments, or ARC, announced on Monday it will sell more than 471 million shares, or around a 47% stake, at R8.50 each, with about 25% sold to three cornerstone investors, including Singapore’s sovereign wealth fund GIC Pte Ltd. 

ARC was formed about a year ago by Motsepe and two other veteran financial services executives, Johan van Zyl and Johan van der Merwe, to build a company controlled by black people and spanning everything from life insurance, healthcare, money management and banking.

Other cornerstone investors are the Public Investment Corporation, Africa’s biggest pension fund with 1.8 trillion assets under its custody, and Sanlam Private Wealth, the asset management arm of South Africa’s biggest insurer Sanlam .

ARC said another R1.9 billion worth of shares, or a 22.4% stake, would be offered to pre-selected institutional investors.

The flotation, slated for September 7, comes at a time when the Johannesburg bourse’s main indexes have been trading at record highs and may encourage other private companies to capitalise on investor sentiment and brave the public markets.

The JSE All-share index, the broadest measure of the South African stock market’s performance, has returned nearly 12% so far this year as investors piled into companies that have branched out of South Africa, where the economy sank into recession in the first quarter.

ARC, whose assets are valued at R4.4 billion and include stakes in pension fund administrator Alexander Forbes and short-term insurer Santam, said the listing was subject to market conditions.

Rand Merchant Bank, an investment banking unit of FirstRand, is arranging the flotation. ($1 = R13.0507) 


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