Tech

Rain to target mobile play

The investment firm, African Rainbow Capital Investments on Tuesday (13 September) reported strong growth in its intrinsic net asset value per share of 14.7% as part of its financial results for the year ended June 2022.

The growth, it said, is the result of good financial performances by some of the businesses it has invested in, including Rain, TymeBank in South Africa, Tyme Global in Singapore, Alexforbes, Fledge Capital and Capital Legacy.

ARC Investments said it managed to grow the value of its total portfolio, excluding cash, by 11.3% to R13.6 billion over the period. The group has shareholdings in 52 companies spanning several economic sectors, including the financial services sector, and telecommunications.

ARC co-CEO Johan van der Merwe, said: “The period under review has been characterised by constrained trading conditions, although there appears to be some economic recovery in some sectors underway.

“Notwithstanding difficult trading conditions, most of the key assets in our portfolio delivered strong results, while others continue to show improvements in their financial performance. Despite the adverse trading conditions, the diversified nature of our investment portfolio has shielded the overall performance of the portfolio from the vagaries of the market.”

The three largest investments in the ARC Fund, which make up 45% of the total portfolio value, are: Kropz, Rain, and TymeBank.

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Rain

For Rain, an additional investment of R56 million was made during the year. Rain participated successfully in the government-initiated spectrum auction where it acquired 20MHz in the 700MHz band and 20MHz in the 2.6GHz band for a total price of R1.43 billion. “The spectrum allocated to Rain is expected to significantly enhance its competitiveness,” said ARC.

The value of the ARC Fund’s interest in Rain has increased by 9.7% to R3.6 billion over the period. Reasons for the increase in valuation include:

  • Rain continues to do well on the sale of both 4G and 5G products as the company continues to enjoy good demand for its products;
  • Rain acquired new spectrum, following the spectrum auction, and the utilisation of additional spectrum is expected to positively impact its cash flow; and
  • ARC Investments invested an additional R56 million in Rain.

Rain achieved its budget of R1 billion EBITDA in its financial year ending February 2022. On a comparable IFRS16 basis, this equates to an EBITDA of more than R3 billion. “A future focus includes mobile, in addition to the present focus on fixed (home) wireless networks,” said ARC.

In August, Rain gatecrashed MTN’s talks with Telkom over a potential acquisition. Rain expressed interest in a merger with Telkom, saying it would create a strong third player to compete with MTN and Vodacom. Rains said that a merger would create a “5G powerhouse”, and ]compete against a “telecommunication duopoly” in South Africa.

TymeBank

The digital bank successfully raised $150 million from new shareholders, Tencent and the CDC, with several of the existing shareholders also following their rights. TymeBank now boasts 5 million customers, 36 months after launch, said ARC.

It has launched several hundred TFG (formerly The Foschini Group) kiosks in August 2022 to be rolled out over a period of four months.

More recently, TymeBank acquired SME lender Retail Capital, set to drive a new SME focus – with some regulatory approvals still outstanding, said the investment firm.

ARC co-CEO Johan van Zyl, said: “Going forward, the company is likely to consider fewer major acquisitions. We had a good run since we listed five years ago. The Covid-19 pandemic has shown us that we have largely made the right investment decisions.”

“With Covid largely behind us, we’ll enter a phase of reviewing our portfolio and consider some pruning over the short to medium term. We have received some unsolicited offers for our shareholdings in a few companies, which we are considering. Should we decide to dispose of some of our investments, we expect the net result will be a more focused portfolio over the medium term.”

Read: Rain courts Telkom with merger talk – MyBroadband

Artmotion S.Africa

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