Wrap Text
Investment update
African Rainbow Capital Investments Limited
(Incorporated in the Republic of Mauritius)
(Registration number C148430)
JSE and A2X share code: AIL
ISIN: MU0553S00000
("ARC Investments" or "the Company")
INVESTMENT UPDATE
ARC Investments is a Limited Partner in an en commandite partnership, the ARC Fund Partnership SA
("ARC Fund"). This announcement provides shareholders with a high-level update on the Company's
progress on strategic matters and a performance overview of the significant investments in the ARC
Fund for the first quarter of the 2024 financial year, being the 3 months to 30 September 2023.
This announcement also includes commentary on significant developments to the end of November 2023.
MACRO ENVIRONMENT
The economic environment during the period under review has been marked by significant challenges,
including elevated interest rates, disruptions to electricity supply, high unemployment and pressure
on disposable incomes. Notwithstanding these unfavourable conditions, several portfolio companies
have demonstrated resilience, and we remain committed to identifying promising investment
opportunities.
DIVERSIFIED INVESTMENTS PORTFOLIO
rain
The take-up of rainOne, which combines mobile and fixed-wireless, unlimited data, free monthly calls
and data for two phones, and a fixed-5G connection, increased steadily during the period under
review. This increase was driven by the conversion of existing customers from legacy products in
addition to the acquisition of new clients. Collections on rainOne products continue to outperform
legacy products while cancellations are lower. rain continues to meet its monthly financial targets.
Kropz Plc (Kropz)
Kropz Elandsfontein faced another challenging period between 30 June 2023 and 30 September 2023.
Localised flooding, heavy rains and breakages impacted both mining and processing operations at
Elandsfontein, leading to increased production downtime. Kropz managed to produce and sell 63 900
tonnes of phosphate concentrate between 30 June 2023 and 30 September 2023.
Kropz aims to step up its production levels by installing an additional centrifuge in February 2024.
The ARC Fund showed its continued support of the project and the ongoing operational ramp-up at Kropz
Elandsfontein and extended an additional R290 million of capital between 30 June 2023 and
30 September 2023.
Bluespec
Bluespec has experienced significant growth over the past few years and is on track to meet its growth
budget following strong volumes and financial performance growth across the various parts of the
group. The group continues to leverage technology to drive efficiencies, significantly grow assessment
volumes, and improve customer satisfaction and retention. Furthermore, the group has managed to
contain operating costs whilst growing market share. The group has maintained its Level 1 B-BBEE,
which is a material differentiator in the market. We remain confident about the growth prospects of
this group.
Ooba
The ooba group has performed well through a tough economic cycle and environment, with persisting
high inflation and interest rates, amongst other variables placing pressure on end consumers. Ooba's
financial performance is tracking its budget, with the management team ensuring that they continue
to drive higher daily intake, registrations, conversion rates, and average bond size. Management has
launched a few innovative customer offerings in response to market demand using its national
footprint and strategic partnerships. These initiatives are showing early good market-fit traction.
Agri portfolio
The consolidation and focusing efforts relating to the Agri portfolio are progressing well. We continue
to be confident that the agri-focused pillar will achieve sustainable long-term growth and continue to
contribute to broader objectives of enhancing food security.
The RSA Group continued to deliver a strong performance for the period under review with an ongoing
focus on financial prudence and strict cost controls. The RSA Group continued to build on growing its
market share and national presence. The group continues investigating inorganic growth opportunities
and exploiting emerging business development opportunities.
Upstream Group of companies
The Upstream group experienced growth in both existing clients as well as the acquisition of new
clients whilst managing costs closely. The group has experienced both a higher value and a higher
number of accounts entering debt review. The reason for this is twofold: Creditors are extending
additional credit to the same pool of consumers, and consumers are entering the debt review process
a lot sooner than in previous years.
The group leverages technology across its operations to improve efficiencies and ensure the scalability
and growth of its service offering at relatively lower costs. The team remains excited about future
growth opportunities. Upstream continues to explore synergies across the ARC network to ensure
sustainable growth and strategic fit of the Upstream group.
FINANCIAL SERVICES PORTFOLIO
TymeBank
Tyme (including TymeBank and GoTyme) has an annual revenue run rate of over R1.8 billion for
TymeBank and R100m for GoTyme. Across its two markets – South Africa and the Philippines – the
business is growing at a pace of 450,000 new customers a month as it works to provide consumers,
particularly the underserved and financially excluded portion of the population, quality financial
services.
TymeBank now serves over 8 million customers since its launch in February 2019, with a current
monthly acquisition rate of 200,000 customers. The bank registers an average of 23 million monthly
transactions and a 70% 30-day account activity rate. The focus remains on profitability in the coming
months.
GoTyme in the Philippines launched in October 2022 in partnership with the Gokongwei Group and is
currently onboarding c.250,000 customers per month with a total customer base of 1,6 million
customers. The bank is exceeding most of its metrics, with deposit growth significantly ahead of
forecasts. It will launch the SME merchant cash advance product in the Philippines in the coming
weeks.
The Tyme group is currently in the process of closing the Series C Capital raise with a combination of
existing and new shareholders.
Crossfin
The South African consumer has felt and continues to feel the pressure of the current economic
environment. This has resulted in constrained consumer spend, which has impacted transaction value
processed for the Crossfin portfolio. However, despite the tough operating environment, the Crossfin
portfolio has shown resilience, with financial performance ahead of the prior year. During the period
under review, Crossfin expanded its portfolio through an early-stage investment in Mypinpad.
Capital Legacy
On 3 February 2023, Sanlam announced the conclusion of an agreement to acquire 26% of Capital
Legacy in exchange for the Sanlam Trust business and cash. This transaction closed during the period
under review. A focus area for management has been integrating the Sanlam Trust business and
launching enhanced Wills and Estate product offerings into the Sanlam Group.
GoSolr
The rollout of solar installations slowed during the quarter under review relative to the previous
quarters, reflecting wider industry trends and reduced instances of load shedding relative to the first
half of calendar year 2023. Management is working on several initiatives to increase the run rate of
installations, focusing on highlighting the cost-effectiveness of residential solar solutions, in addition
to convenience during periods of load shedding.
Disclaimer
The financial information on which this announcement is based has not been reviewed or reported on
by the Company's external auditors.
Ebene, Mauritius (with simultaneous circulation in Johannesburg)
07 December 2023
For further information please contact:
Company Secretary
Intercontinental Trust Limited
Tel: +230 430 0800
JSE Sponsor
Deloitte & Touche Sponsor Services Proprietary Limited
Date: 07-12-2023 07:05:00
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