Patrice Motsepe’s African Rainbow Capital Financial Services Investments has increased its stake in Alexforbes to nearly 46% — cementing its place as the company’s anchor shareholder.
Alexforbes on Monday said African Rainbow Capital Financial Services Investments now owns 45.6% of the group’s securities.
ARC Investments, run by joint CEOs Johan van der Merwe and Johan van Zyl, first invested in Alexforbes in 2017 — an investment that was followed by a strategy overhaul, championed by the investment group.
Alexforbes stock is up 117% over the past three years — with the investment a boon for ARC Investments — as acknowledged by the co-CEOs in their letter to shareholders a few months ago.
“We initiated a restructuring process after acquiring a stake in the well-established and mature business operating in a stagnant job market with fewer people contributing towards retirement. This involved moving the business away from capital-intensive ventures and divesting from some businesses that were no longer aligned with the revised strategy,” the co-CEOs said in their letter to shareholders published in the group’s 2024 annual report.
“As a result, the business became leaner, more focused and efficient with substantially reduced capital requirements. So much so that Alexforbes could return capital to its shareholders. We purchased our 42% stake in the company for approximately R3bn and have since received over R2.5bn in dividends and returned capital, achieving an annualised return on our investment of around 30%.”
Van Zyl pushed hard against the Ambition 2022 strategy, deployed by erstwhile Alexforbes CEO Andrew Darfoor, which focused on driving growth through expanding its retail business segment alongside expansion in Sub-Saharan Africa through selective bolt-on acquisitions.
Van Zyl, a former CEO and chair of insurance major Sanlam, was of the view that instead of playing in capital-intensive areas such as insurance (both life and general), where the company did not have scale, Alexforbes should rather focus on advice and distribution as its core contribution.
The deadlock between ARC Investment led to the ouster of Darfoor, alongside several other executives. Alexforbes has since disposed of its short-term insurance business under CEO Dawie de Villiers.
De Villiers, a former Sanlam executive, has made several moves since taking over in 2018, including making a foray into the R500bn discretionary fund management market.
ARC Investments manages a portfolio of mainly SA investments, valued at more than R20bn — with the outfit forming an integral part of the Ubuntu-Botho Investments group structure.
The management of ARC Investments has been grappling with the company’s huge discount to net asset value (NAV), with a possible delisting from the JSE on the cards should the gap persist.
The discount refers to the difference between a company’s share price and its NAV, which in ARC Investments’ case is almost 50%.
ARC Investment’s share price has surged 32% over the past six months, valuing the group at R12.2bn.
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