JSE-listed African Rainbow Capital (ARC) Investments has reported good performances and progress across its portfolio of investments in South Africa in the first quarter of this year.

ARC Investments’ only asset is the ARC Fund, which has interests in various companies from financial services to mining.  

ARC Fund’s telecoms affiliate rain successfully participated in government’s spectrum auction, acquiring 2 x 10 MHz in the 700 MHz band and 20 MHz in the 2.6 GHz band, for a total price of R1.43-billion.

Although the additional spectrum acquired is expected to positively impact the valuation of the ARC Fund’s investment in rain, the use of the spectrum and its impact on rain’s cash-flow forecast are still being determined.

The estimated impact of the spectrum auction will, therefore, only be reflected in the June 2022 valuation of the ARC Fund’s investment in rain.

Further, in the quarter under review, ARC Fund successfully completed its divestment from the telecommunications services provider Metrofibre, for a total R275-million. The sale realised an overall gain of R37-million.

On the mining side, diversified resource and materials company Afrimat has been performing well, but ARC Fund nonetheless disposed of four-million Afrimat shares between December 31, 2021, and March 31 this year, resulting in a cash injection of R244-million into the fund, and a profit of R132-million.

ARC Fund still holds a 7.3% shareholding in Afrimat.

Aim-listed Kropz is still commissioning the long-awaited Elandsfontein phosphate mine, in the Western Cape. ARC Fund advises that slower-than-expected progress in ramping up production has resulted in ARC Fund having to extend further funding for working capital purposes.

ARC Fund, nevertheless, remains committed to seeing the project through to production, particularly as market demand for phosphate and fertiliser remains strong.

Meanwhile, ARC Fund reports that the Bluespec business, which is also an investment holding company focused on vehicle logistics and repair services, has been delivering more volumes and improved operational efficiencies.

The business is continuing to reduce its interest-bearing debt and optimising cash generation from operations. Particularly, ARC Fund says, Bluespec’s investment in digital vehicle bidding platform Weelee is gaining traction in the market.

This while ARC Fund disposed of its investment in digital vehicle selling platform WeBuyCars.

The fund also acquired an additional 21-million shares in Alexander Forbes Group Holdings, resulting in a shareholding of 41.47%.

ARC Fund in the quarter under review also received an offer from a buyer to acquire its investments in PayProp and Humanstate, which it is in the process of evaluating.

ARC Fund holds an 11.1% stake in holding company Humanstate, which holds property management platform PayProp South Africa and various other international PayProp expansions.

Moreover, ARC Fund says digital retail bank TymeBank is sustaining its momentum of gaining about 130 000 customers a month.

In the quarter under review, TymeBank decided to appoint founding member and Tyme Global chairperson Coenraad Jonker to the CEO position, after the company appointed Tauriq Keraan to a new international executive role.

Further, the Rand Mutual Holdings business continues to generate positive results following the implementation of a new five-year growth strategy.

Lastly, ARC Fund advised that it is reviewing the annual management and performance fees of the fund. Upon listing ARC Investments in 2017, the company and its general partner decided that the ARC Fund fee structure would be reviewed after five years.

The parties are aiming to obtain shareholder approval on the restructure at an annual general meeting in November.