Wrap Text
Investment update
African Rainbow Capital Investments Limited
(Incorporated in the Republic of Mauritius)
(Registration number C148430)
JSE and A2X share code: AIL
ISIN: MU0553S00000
("ARC Investments" or "the Company")
INVESTMENT UPDATE
ARC Investments is a Limited Partner in an en commandite partnership, the ARC Fund Partnership SA
("ARC Fund"). This announcement provides shareholders with a high-level update on the Company's
progress on strategic matters and a performance overview of the significant investments in the ARC
Fund for the first quarter of the 2025 financial year, being the 3 months to 30 September 2024.
This announcement also includes commentary on significant developments to the end of October 2024.
MACRO ENVIRONMENT
South Africa's post-election business landscape is marked by cautious optimism, with increased
investor interest tempered by uncertainty surrounding policy direction under the newly formed
government of national unity. While significant economic challenges persist, recent interest rate cuts
and growing political stability signal potential for improved consumer spending and business
confidence. However, tangible benefits are likely to emerge gradually rather than immediately.
DIVERSIFIED INVESTMENTS PORTFOLIO
rain
Rain has reported a successful quarter marked by significant growth in mobile customers, fueled by
the popularity of its rainOne and rain mobile offerings. This success is further underscored by a major
network upgrade to Huawei's Apollo 5.5G, boosting performance and capacity. Additionally, rain
expanded its connectivity options with new offerings, including the 101 pro and 101 xtender, providing
customers with more choices. These achievements highlight rain's continued growth and momentum
in the telecommunications market.
Kropz Plc (Kropz)
Kropz continues making progress at both Kropz Elandsfontein and Cominco. Production at Kropz
Elandsfontein was slowed to reduce operational costs and losses as process modifications are
implemented. Kropz Elandsfontein expects these modifications to result in production efficiencies as
early as December 2024. Kropz Elandsfontein produced 69 532 tonnes of phosphate over the quarter.
The ARC Fund injected an additional R140 million in capital during the quarter. After 30 September
2024, the ARC Fund injected an additional R270 million as part of restructuring and capital raise
transactions of the Kropz Group.
Bluespec
The Bluespec Group continues to be a strong performer within the business process outsourcing (BPO)
pillar of the ARC Fund with strong financial performance across the various business units within the
Group. The Group is performing in line with the high growth budgets set by the board. The Weelee
business is growing, with successful marketing campaigns launched and monthly sales volumes
increasing. The Group continues to deploy technology to drive efficiencies across all operations and
increased financial performance. This has led to strong cash flow generation, increased dividend
payouts, and shareholder returns. We expect strong growth into the medium term with new product
and service offerings, and we believe the management base is strong and highly competent to execute
the growth strategy successfully.
Relations with all customers and relevant stakeholders continue to improve. The Group has
maintained its B-BBEE Level 1 and implemented various strategies to complement strong corporate
governance in line with best practice.
Upstream
Consumer Friend, the biggest business unit in the Upstream Group, took two prestigious awards at
this year's Debt Review Awards. These awards recognise the Group's unwavering commitment to
supporting consumers in managing their debts and achieving financial stability.
As we review the financial performance of the Upstream Group for Q2 2025, we observed contrasting
results among the individual companies, which reflects the diverse conditions within the debt recovery
industry. Overall, the Group reported a 13% increase in EBITDA compared to Q2 2024, attributable to
a 7% increase in Group revenue and a 2% reduction in expenses, the latter attributable to cost
containment strategies implemented by the Group.
The Group delivered a solid performance this period, marked by healthy operating margins, well-
managed expenses, and strong liquidity. This robust financial position allows for continued investment
in key growth strategies currently being implemented. Notably, "Active Accounts" reached a record
high, showing an 8.96% increase compared to the previous quarter. While we anticipate challenges
in the coming quarters due to the prevailing economic climate, we remain confident in our ability to
navigate these headwinds and deliver continued growth.
Agri portfolio
Despite navigating a challenging economic environment with rising costs and logistical constraints
impacting some business units, the Agri portfolio's overall financial performance remains in line with
projections.
RSA Group celebrated its 40th anniversary this year. Over the past four decades, the business has been
pivotal in developing South Africa's fresh produce industry, fostering trade, and creating opportunities
across the value chain.
Looking ahead, ARC and the various executive management teams are focused on optimising operational
efficiency and profitability. This includes restructuring initiatives, strategic partnerships,
and a commitment to expanding market share through increased footprint, product diversification,
and digital innovation. Furthermore, the group remains dedicated to increasing sustainable access to
food and enhancing food security.
FINANCIAL SERVICES PORTFOLIO
TymeBank
Tyme Group continues its strong growth trajectory, with 14.4 million customers across TymeBank
(10m) and GoTymeBank (4.4m) as of September 30, 2024. The average activity rate is 74% across these
customers, including transactional activity and deposit balances. TymeBank achieved sustainable
profit levels at 30 September 2024, while GoTymeBank continues to track in line with its key metrics.
The acquisition of Savii, a Philippine payroll lender, has been finalised and integration is underway.
Further strengthening its leadership, TymeBank appointed Karl Westvig, former CEO of Retail Capital,
as its new CEO effective October 1st 2024. TymeBank continues to grow its lending book within well-
defined risk parameters. Tymebank's deposit base continues to grow, with notable growth in the fixed
deposit product in line with expectations. Tyme Group is now pursuing a Series D capital raise to
enhance the profitability of the existing operations and fuel expansion into new markets.
ooba
Ooba is experiencing a marked increase in home loan applications following the recent interest rate
cut. This positive trend is reflected in key metrics exceeding budget expectations, including average
daily application intake, average bond size, and conversion rates. October bond production increased
significantly, up 18.7% compared to the same period last year and 26.8% compared to the previous
month.
This strong performance positions ooba for continued success, with the existing business on track to
meet budget targets. Moreover, management remains focused on executing growth strategies and
leveraging synergies within the ARC network to capitalise on this positive momentum.
Crossfin
Crossfin achieved a significant milestone this past quarter with the successful sale of its portfolio
company, Adumo, to Lesaka Technologies for R1.6 billion. This transaction resulted in ARC acquiring
shares in Lesaka Technologies.
Furthermore, Crossfin delivered strong year-on-year performance, with notable increases in both
revenue and EBITDA. We anticipate this positive trend to continue, driven by an expected upswing in
merchant transaction activity in Q4.
Despite muted business confidence and economic pressures impacting consumer spending, which led
to lower-than-anticipated growth across our merchant acquiring platforms, we remain optimistic.
With improving national sentiment and anticipated economic recovery, we expect a corresponding
improvement in platform performance going forward.
Capital Legacy
Capital Legacy, South Africa's leading estate administrator, continues its impressive growth trajectory
despite challenging economic headwinds. The company's unique estate administration insurance product
sets it apart in the market, and its recent strategic moves have further solidified its position.
Following a 26% investment from Sanlam and the acquisition of Sanlam Trust, Capital Legacy has
bolstered its resources and is now leveraging this enhanced capacity to drive new business growth.
This partnership with Sanlam is yielding significant results, and Capital Legacy remains committed to
exploring the considerable growth opportunities it presents.
Disclaimer
The financial information on which this announcement is based has not been reviewed or reported on
by the Company's external auditors.
Ebene, Mauritius (with simultaneous circulation in Johannesburg)
10 December 2024
For further information please contact:
Company Secretary
Intercontinental Trust Limited
Tel: +230 430 0800
JSE Sponsor
Deloitte & Touche Sponsor Services Proprietary Limited
Date: 10-12-2024 07:30:00
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