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Offer to African Rainbow Capital Investments Limited shareholders, proposed delisting and proposed re-domiciliation
AFRICAN RAINBOW CAPITAL INVESTMENTS
LIMITED
(Incorporated in the Republic of Mauritius)
(Registration number C148430)
JSE and A2X Share Code: AIL
ISIN: MU0553S00000
("ARCI" or "the Company" or "ARC
Investments")
AFRICAN RAINBOW CAPITAL PROPRIETARY K2025167229 (SOUTH AFRICA)
LIMITED PROPRIETARY LIMITED
(Incorporated in the Republic of South Africa) (Incorporated in the Republic of South Africa)
(Registration number 2015/000394/07) (Registration number 2025/167229/07)
("ARC") ("ARC SPV")
JOINT ANNOUNCEMENT OF OFFER BY AFRICAN RAINBOW CAPITAL PROPRIETARY
LIMITED AND K2025167229 (SOUTH AFRICA) PROPRIETARY LIMITED TO ACQUIRE
ALL OF THE ARCI SHARES THAT THEY DO NOT ALREADY OWN, THE PROPOSED
DELISTING OF ARCI; AND PROPOSED RE-DOMICILIATION OF ARCI TO SOUTH
AFRICA
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,
DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF
SUCH JURISDICTION
1. Introduction
1.1 Holders of ordinary shares in ARCI ("Shareholders") are referred to the statement
in ARCI's Integrated Annual Report of 30 June 2024, that in the next financial year,
the board of directors of ARCI ("Board") will be "assessing a delisting of ARC
Investments while continuing to deploy strategies to narrow the discount to net
asset value".
1.2 In order to facilitate the delisting of ARCI, ARC and ARC SPV, (collectively the
"Offerors") have offered to acquire all the issued ordinary shares in ARCI
("Shares") not already owned by the Offerors ("Offer"), subject to the terms and
conditions set out below.
1.3 Subject to the relevant approvals, the Offer will result in the delisting of ARCI from
the exchange operated by JSE Limited ("JSE") and A2X Markets ("A2X")
("Delisting"), in accordance with paragraphs 1.14, 1.15 and 1.16 of the JSE
Listings Requirements ("JSE Listings Requirements") and the re-domiciliation of
ARCI from Mauritius to South Africa ("Re-domiciliation").
2. Consideration
2.1 The Offer is made for a cash consideration of ZAR9.75 per Share
("Offer Consideration"), payable against delivery of the registered and beneficial
ownership of the relevant Shares into the Offerors' names.
2.2 The Offer Consideration represents:
2.2.1 a premium of 12.6% to the closing price of ZAR8.66 per Share; and
2.2.2 a premium of 21.0% to the 30-day volume weighted average price of
ZAR8.06 per Share,
as at market close on Friday, 14 March 2025 and a discount of 22.8% to the net
asset value per Share as set out in the ARCI interim results announcement issued
on the same date as this announcement.
3. Salient terms of the Offer
3.1 As one of the conditions to the Offer, the Offerors require that the Board proposes
and the Shareholders approve a resolution for the delisting of the Shares from the
Main Board of the JSE and A2X in accordance with paragraphs 1.14, 1.15 and
1.16 of the JSE Listings Requirements ("Delisting Resolution"), to support the
application by ARCI to the JSE for the Delisting.
3.2 The Offer will be subject to the further condition that the Board proposes, and the
Shareholders approve a resolution for the re-domiciliation of ARCI from Mauritius
to South Africa ("Re-domiciliation Resolution"). ARCI will be required to follow
the prescribed procedures set out in the Mauritian Companies Act, 15 of 2001, as
amended ("Mauritian Companies Act") and section 13 of the South African
Companies Act 71 of 2008, as amended ("South African Companies Act") in
order to implement the Re-domiciliation.
3.3 The Offer and the Delisting (on one hand) and the Re-domiciliation (on the other
hand) will be subject to the fulfilment or waiver (as the case may be) of the
conditions precedent set out in paragraphs 8.1 and 8.2 below, respectively.
3.4 In terms of the Offer, the Offerors will acquire all of the Shares for which they
receive valid acceptances prior to the closing date of the Offer, being 12:00 South
African time on a date to be announced on SENS and A2X ("Closing Date"), from
the Shareholders who validly and lawfully accept the Offer by the Closing Date
and who are thus entitled, subject to the Offer being implemented, to receive the
Offer Consideration ("Offer Participants").
3.5 The Offer Consideration will be paid in cash into the designated bank account of
Computershare Investor Services Proprietary Limited, being the transfer
secretaries of ARCI ("Transfer Secretaries"), so that by no later than the third
business day following the Closing Date, the Transfer Secretaries are able to make
payment to the Offer Participants.
3.6 Immediately following the implementation of the Offer, the Shares will be delisted
from the Main Board of the JSE and A2X.
4. Rationale for the Offer
4.1 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. 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. It is anticipated that
the Offer will result in a return of value for investors.
4.2 At the time of listing ARCI, the rationale for incorporating ARCI in Mauritius was
its business-friendly environment, the tax treaties which Mauritius has in place and
not only to attract capital from investors outside South Africa (and the Common
Monetary Area), but also to facilitate investments outside South Africa, if required
by international investors. This strategy has not materialised to the extent
expected. ARCI attracted very limited international funding, and no funding due to
the Mauritian structure. Also, ARCI is mainly invested in South African companies.
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 for South African resident ARCI
shareholders vis-à-vis the underlying South African investments.
4.3 ARCI will give notice of a meeting to approve the Delisting and the Re-domiciliation
at the same time, so as to enable the Re-domiciliation (which will be subject to
approval by Shareholders and compliance with Mauritian regulatory requirements)
to occur as soon as reasonably possible after the Delisting.
5. Information about the Offerors and the ARC Fund
5.1 ARC SPV holds 48.82% of the Shares directly and is the largest direct Shareholder
in ARCI. Ubuntu-Botho Investments Proprietary Limited ("UBI"), holds c.12.15%
of the issued shares in ARC SPV, and ARC holds c.87.85% of the issued shares
in ARC SPV. ARC holds an additional 0.81% of the Shares indirectly through its
shareholding in African Rainbow Capital Financial Services Holdings Proprietary
Limited ("ARC FSH"), which in turn is the holding company of ARC Financial
Services Investment Proprietary Limited ("ARC FSI"), which holds 2.16% of the
Shares. UBI General Partner Proprietary Limited ("UBI GP"), a wholly-owned
subsidiary of UBI, controls 7.35% of the Shares through the ARC Fund and
additionally controls a further 0.81% of the Shares through the ARC Fund's 37.4%
direct interest in ARC FSH, and through ARC FSH's control of ARC FSI. Through
its 50% indirect stake in K2017386337 (South Africa) Proprietary Limited
("K2017386337"), UBI holds an additional 2.72% of the Shares. Accordingly,
directly and through ARC SPV, ARC, UBI GP and K2017386337, UBI is the largest
indirect shareholder of ARCI and is its holding company, controlling in aggregate
c. 60.51% of the Shares. UBI GP, K2017386337 and ARC FSI currently intend to
retain their direct interests in ARCI post the Offer, Delisting and Re-domiciliation
and therefore will not accept the Offer.
5.2 ARCI is the limited partner holding the majority of the economic interest in the ARC
Fund, which is an en commandite partnership, of which UBI GP is the general
partner. UBI GP manages the ARC Fund. ARC provides certain administrative
services to UBI GP in connection with its management of the ARC Fund.
ARC Fund is the vehicle through which ARCI's interests in the underlying portfolio
companies are held.
6. Funding and Control
6.1 The Offerors have been advised that no merger notifications will be required given
that UBI will retain sole control of ARCI for South African competition law
purposes.
6.2 The Offerors hold or are able to draw down sufficient funds to fully satisfy the
anticipated uptake of the Offer.
7. Circular
7.1 A combined offer circular containing full details of the Offer, Delisting and Re-
domiciliation and notice of General Meeting and incorporating the Board's opinion
and recommendation on the Offer and the final Fairness Opinion, is in the process
of being prepared and will be distributed to Shareholders in due course (the
"Circular").
7.2 Shareholders will be advised of the posting of the Circular and the opening date
of the Offer by means of a SENS and A2X announcement.
8. Conditions Precedent
8.1 The implementation of the Offer and the Delisting is conditional upon the fulfilment
or waiver (as the case may be) of the following conditions precedent:
8.1.1 by no later than 11 April 2025, ARCI procuring and receiving an independent
expert's opinion in respect of the fairness of the Offer ("Fairness Opinion")
in accordance with Schedule 5 of the JSE Listings Requirements as required
by paragraph 1.15(d) of the JSE Listings Requirements;
8.1.2 by no later than 11 April 2025, the Board recommending that Shareholders
vote in favour of the Delisting Resolution and the Re-domiciliation Resolution
to be proposed at the general meeting convened for purposes of considering
them ("General Meeting");
8.1.3 by no later than 17:00 on 22 April 2025, the receipt of the required approval
from the JSE and an authorised official of the Financial Surveillance
Department of the South African Reserve Bank (collectively
"Regulatory Approvals") for the issue of the Circular and the
implementation of the Offer, the Delisting and the Re-domiciliation on an
unconditional basis; provided that if any such Regulatory Approval is granted
subject to any condition or qualification, then the Offerors and ARCI must
agree to the imposition of such condition or qualification in writing (which
agreement shall not be unreasonably withheld or delayed) in which event
the Regulatory Approval will be regarded as having been granted by the
relevant authority;
8.1.4 by no later than 17:00 on 2 June 2025:
8.1.4.1 the Delisting Resolution having been adopted by the requisite
majority of Shareholders who are entitled to attend and vote on that
resolution at the General Meeting as contemplated in
paragraphs 1.15(a) and 1.16 of the JSE Listings Requirements; and
8.1.4.2 the Re-domiciliation Resolution having been adopted by the
requisite majority of Shareholders who are entitled to attend and
vote on that resolution at the General Meeting, pursuant to the
prescribed procedures set out in the Mauritian Companies Act and
section 13(6)(b) of the South African Companies Act.
8.2 The implementation of the Re-domiciliation is conditional upon the fulfilment of the
following conditions precedent:
8.2.1 Shareholders approving the Re-Domiciliation Resolution; and
8.2.2 all regulatory approvals required under the South African Companies Act
and the Mauritian Companies Act to implement the Re-domiciliation, are
obtained without conditions or subject to such conditions as are approved
by the Offerors.
8.3 The Offerors and ARCI shall use their reasonable endeavours to procure the
fulfilment of each of the conditions precedent as soon as practicably possible, to
the extent that it is within their respective power or control to do so. The Offerors
shall be permitted to waive any conditions precedent which are capable of waiver
in whole or in part, on written notice to ARCI.
8.4 The dates stipulated in paragraph 8.1 for the fulfilment or waiver (as the case may
be) of the conditions precedent in that paragraph may be extended by the Offeror
by up to three months, subject to any approval that may be required from the JSE.
The extension of any such dates will be announced on SENS, A2X and on ARCI's
website at https://arci.mu/.
9. Termination of the Offer
9.1 The Circular will provide that the Offer will terminate with immediate effect, and all
rights and obligations of the Offerors and ARCI under the Offer shall, subject to
any surviving provisions of the Circular, terminate forthwith if any of the conditions
precedent become incapable of fulfilment, and the Offerors do not waive the
Condition/s Precedent concerned (to the extent permitted as per paragraph 8.3).
9.2 Failure to obtain the required shareholder approval for the Delisting Resolution
shall not affect the implementation of the Re-domiciliation should the Re-
domiciliation Resolution be approved by the requisite shareholder majority.
10. Appointment of the independent expert
10.1 The Board has appointed BDO Corporate Finance Proprietary Limited ("BDO"),
as the independent expert, to provide the Board with the Fairness Opinion in
accordance with the JSE Listings Requirements.
10.2 Based on the draft Fairness Opinion received from BDO, which takes into account
ARCI's interim results for the six-month period ending on 31 December 2024, and
subject to the final Fairness Opinion being issued and confirming that the Offer is
fair to Shareholders, the Board is of the opinion that the Offer Consideration is fair
to Shareholders, and intends, in the Circular, to recommend that Shareholders
vote in favour of the Delisting Resolution and Re-domiciliation Resolution and
accept the Offer.
11. The Board responsibility statement
The Board (to the extent that the information relates to ARCI), collectively and
individually, accept responsibility for the information contained in this announcement
and certify that, to the best of their knowledge and belief, the information contained in
this announcement relating to ARCI is true and this announcement does not omit
anything that is likely to affect the importance of such information.
12. Offerors responsibility statement
The Offerors (to the extent that the information relates to the Offerors) accept
responsibility for the information contained in this announcement and certify that, to
the best of their knowledge and belief, the information contained in this announcement
relating to the Offerors is true and this announcement does not omit anything that is
likely to affect the importance of such information.
Ebene, Mauritius (with simultaneous circulation in Johannesburg)
18 March 2025
Corporate Advisor to ARCI: Deloitte Consulting Proprietary Limited
Transaction Sponsor: Deloitte & Touche Sponsor Services Proprietary Limited
Legal Advisor to ARCI: BLC Robert & Associates
Independent Expert: BDO Corporate Finance Proprietary Limited
Legal Advisor to the Offerors: Webber Wentzel
The contents of this announcement do not constitute legal advice or purport to
comprehensively deal with the legal, regulatory and tax implications of the Offer, Delisting,
Re-Domiciliation or any other matter relevant to each Shareholder. Shareholders are
accordingly advised to consult their professional advisers about their personal legal,
regulatory and tax positions regarding the Offer, Delisting, Re-Domiciliation or any other
matter.
Date: 18-03-2025 07:05:00
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