African Rainbow Capital Investments (ARCI) said the performance of several of its portfolio companies has been resilient in the third quarter and further attractive investment opportunities are being sought.
The three months to end April 2023 have been characterised by a challenging macro-economic environment featuring currency weakness, high inflation, rising interest rates and load shedding. GDP growth is sluggish, business and consumer sentiment remain low.
The ARC Fund continued to buy ARCI shares during periods of price weakness.
On the investment in rain, ARCI said the telecoms company had expanded its 4G network after acquiring spectrum in the 2022 government auction.
This saw it become a full mobile network operator, offering national voice, SMS and data coverage.
A new product, rainOne, combines mobile and fixed-wireless, unlimited data, free monthly calls and data for two phones, and a fixed-5G connection at an affordable monthly price, ARCI said in an update Friday.
“The company expects a significant number of existing customers to switch to this new offering and to acquire new customers. Rain continues to meet its monthly financial targets,” ARCI said.
Meanwhile, the ARC Fund maintained its financial support of Kropz Elandsfontein’s operations during its ramp-up phase, by extending an additional R285 million bridge loan facility in March 2023.
Between December 2022 and March 31 2023, Elandsfontein produced and sold over 53 000 tonnes of phosphate concentrate.
“Although supply chain issues affected production volumes, significant progress has been made to improve processing stability and run times,” ARCI said.
ARCI said it was restructuring and aligning its agricultural portfolio to unlock untapped efficiencies and cross-selling opportunities.
“Our goal is to create an ecosystem where our agricultural-focused businesses can work together to achieve substantial growth, enhance food security, and reduce the cost of food delivery. By leveraging off each other’s strengths, we believe we can create a more efficient and effective system using the Acorn Agri and Food platform.”
Meanwhile, the shareholding in the Upstream Group of Companies was increased from 25% to 49% following the exit of an existing shareholder.
“Upstream is a uniquely positioned, technology-focused, debt review, rehabilitation, and recovery service provider. Upstream performs a pivotal role in the wider debt review ecosystem on behalf of creditors. We believe that the higher level of unsecured credit lending, including the tough economic environment, will lead to more debt reviews and debt recoveries which translates into increased potential demand for services provided by the Upstream group of companies,” ARCI said.
ARCI’s directors said Tyme, which includes TymeBank and GoTyme and of which ARCI is the major shareholder, was growing at 300 000 new customers per month across its two markets, South Africa and the Philippines as it works to provide financial services to particularly the under-served and financially excluded portion of the population.
TymeBank now serves over 7 million customers since its launch in February 2019, with a current monthly acquisition rate of 188 000 customers.
The bank registers an average of 23 million monthly transactions and a 70% 30-day account activity rate. The focus remained on profitability in the coming months.
GoTyme in the Philippines launched in October 2022 in partnership with the Gokongwei Group, and was exceeding its business plan targets, ARCI said.
On the Crossfin investment, ARCI said the portfolio was resilient in spite of the difficult consumer environment and the negative impact of load shedding on point-of-sale businesses such as Adumo payments and iKhokha.
“Overall, the portfolio's performance is ahead of the prior year and in line with expectations,” ARCI said.
ARCI’s share price traded 3.02% higher to R6.49 on Friday, broadly in line with the price a year ago and despite a volatile range of pricing through the year.
BUSINESS REPORT