Big move for billionaire Patrice Motsepe’s investments

Billionaire Patrice Motsepe’s investment arm, African Rainbow Capital Investments (ARCI), wants to delist from the Johannesburg Stock Exchange (JSE).

The group has put forward an offer to shareholders which, if approved, will see ARCI delisted from the JSE and A2X exchanges and move its home base from Mauritius to South Africa.

The group is offering to buy back its shares for a cash consideration of R9.75 per share, payable against delivery of the registered and beneficial ownership of the relevant shares back to ARC.

The purchase offer is a premium of 12.6% on the closing price of R8.66 a share and also a 21% premium on the 30-day volume weighted average price of R8.06 a share.

In terms of the offer, the board will have to approve the delisting, and support the move from Mauritius to South Africa.

Explaining the move, the group said that the public shareholding in ARCI is limited, as all or almost all of the shareholders are South African, and there is limited liquidity in the ARCI shares.

It added that the ARCI share price also does not reflect the true value of the investment in the ARC Fund and trades at a discount to the net asset value of the ARC Fund, meaning that investors in ARCI are not receiving the true value of their investment.

The offer is expected to result in a value return for investors.

ARCI said that at the time of listing, Mauritius was a business-friendly environment and had room to attract capital from investors outside of South Africa while also facilitating investments in South Africa.

However, this strategy has not played out to the extent it expected.

“ARCI attracted very limited international funding and no funding due to the Mauritian structure. Also, ARCI is mainly invested in South African companies,” it said.

“The cost to operate and oversee the affairs and operations of ARCI in Mauritius has become increasingly expensive. In addition, changes to tax legislation since the ARCI listing have resulted in tax inefficiency.”