South Africa’s ARC Investments IPO targets $650 mln valuation

JOHANNESBURG, Aug 28 (Reuters) – ARC Investments , a holding company co-founded by South African mining tycoon Patrice Motsepe, said it will sell shares worth 4 billion rand ($306 million) in an initial public offering that values the company at 8.5 billion rand.

African Rainbow Capital Investments, or ARC, announced on Monday it will sell more than 471 million shares, or around a 47 percent stake, at 8.50 rand each, with about 25 percent 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 1.9 billion rand worth of shares, or a 22.4 percent stake, would be offered to pre-selected institutional investors.

The flotation, slated for Sept. 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 percent 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 4.4 billion rand 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 = 13.0507 rand) (Reporting by Tiisetso Motsoeneng; Editing by Ed Stoddard and Susan Fenton)

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