Patrice Motsepe’s African Rainbow Capital Investments (ARC) has invested further in Rain, increasing its equity stake in the telecom operator, with it now valuing the entire business at more than R20bn.
“During the year ARC Fund bought shares from some of the existing shareholders of Rain and invested funds in new ventures totalling R126m,” ARC said as it reported earnings for the 12 months to end-June.
This helped push up the valuation of ARC Fund’s shareholding in Rain from R4.52bn in June 2023 to R5.24bn. ARC Fund owns 26% of Rain.
ARC invests in start-up businesses that aim to disrupt the status quo in areas such as financial services and telecoms. Its diverse portfolio of listed and unlisted assets is valued at R20.2bn.
During the period, ARC Investments made an additional investment of R169m in Tyme Group, R161m in ARCH Emerging Markets Partners and R143m in ARC Investment shares, benefiting from the considerable discount to net asset value.
“Rain ranked as the top-performing operator in the DataEQ/PwC Telecommunications Industry Index 2023. The company secured the number one position in both operational performance and public net sentiment, making it the only operator in the industry with a positive net sentiment,” ARC said in its earnings report. “This achievement establishes Rain as SA’s most liked network provider.”
During the financial year to end-February, the mobile provider achieved its budgeted earnings before interest, tax, depreciation and amortisation (ebitda) of R2.5bn.
ARC is bullish about the cellphone company’s prospects.
“Rain has solidified its position as an affordable data and mobile service provider and continues to experience substantial subscriber growth. While risks persist, Rain is well positioned to manage them and further establish itself as a trusted brand in SA,” said the fund.
The introduction of RainOne, along with the 101 5G router, “has significantly boosted Rain’s growth”.
RainOne plans, introduced in May 2023, offer customers packages that combine a fixed-5G plan with two Rain 4G mobile SIMs.
This “coupled with the business having moved beyond its most significant period of net cash outflows, has been a key factor in the increase in fair value of Rain’s investment”.
In July Rain launched the stand-alone 4G mobile service and it continues to expand its coverage in towns and major metros nationwide, said ARC.
Rain had previously been a data-only provider, focused on fixed internet provision to homes. With Jacqueline Mackenzie
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.