Patrice Motsepe's African Rainbow Capital plans to delist from JSE
The group also wants to move its headquarters from Mauritius to South Africa, according to its Sens announcement.
Patrice Motsepe / Wikimedia Commons: CGZ G3N3
The Money Show's Stephen Grootes interviews Johan van der Merwe, co-CEO of African Rainbow Capital.
African Rainbow Capital Investments (ARCI), intends to delist from the Johannesburg Stock Exchange (JSE).
In a Sens announcement, the investment holding company said that in order to facilitate the delisting of ARCI, ARC and ARC SPV have offered to acquire all the issued ordinary shares in ARCI they don't already own. (Click here to view ARCI's half-year financial results)
The group, backed by Patrice Motsepe, is offering its shareholders R9.75 per share.
It also wants to shift its domicile from Mauritius to South Africa.
In conversation with Stephen Grootes, ARC co-CEO Johan van der Merwe confirms that discount for its shares on the JSE has not been satisfactory.
While most investment holding companies do trade at a discount, the level of ARC's is too low, says van der Merwe.
"What we've been trading at for most of the time that we've been listed has probably been at the 50% mark, and one would expect anything between 15-25% discount for these holding companies."
Johan van der Merwe, Co-CEO - African Rainbow Capital"
"If we'd been trading at those type of discounts during the time maybe we would have been ok with it... but we've been considering this for quite a while and it doesn't really make sense for us to remain listed at this level."
Johan van der Merwe, Co-CEO - African Rainbow Capital
Looking at the reasons for this thin trade, van der Merwe cites the low level of their free float (shares of a company that can be publicly traded and are not restricted).
And while ARC's holdings in TymeBank and Rain are good investments, they didn't create the cash flow some investors would expect, he goes on.
"With the free float, if one takes all the 'related parties' that's about 80%. Then there's one big other shareholder of about 10%, and then the REAL free float is only about 10%, so I think the free float has a lot to do with it."
Johan van der Merwe, Co-CEO - African Rainbow Capital
"And with some of the early-stage investments that we've had it's difficult for people to see the runway in terms of cash generation and so on, even though the likes of Tyme Bank and Rain for instance we believe are very good investments and over time will get there."
Johan van der Merwe, Co-CEO - African Rainbow Capital
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