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African Rainbow Capital releases maiden interims

ARC co-CEO Johan van der Merwe says the company currently has a total NAV of about R9 billion.

NASTASSIA ARENDSE:  African Rainbow Capital Investments announced its maiden interim financial results today, with an intrinsic portfolio value of 14.8%. I spoke to Johan van der Merwe, who is the co-chief executive at ARC.

JOHAN VAN DER MERWE:  It’s just under four months for our first set of results. We showed an annualised return just shy of 15%. It’s a very short-term period, and many of the acquisitions that we’ve made in the meantime will still be shown as cost, and we didn’t revalue them.

We started off the company with about R4.4 billion of investments that we transferred into the listed vehicle, and we raised about R4.3 billion from outside of this. And after that we have a portfolio after revaluation of about R7 billion, making it a total net asset value of about R9 billion for the company at this point in time.

NASTASSIA ARENDSE:  The operating environment – how did you find it?

JOHAN VAN DER MERWE:  I think it was a tough operating environment for most of that period. Obviously a lot of people were sitting on their hands, waiting for the political situation to play itself out, which it did in mid-December. From then on we definitely have seen a much more positive environment. And because we are really exposed to the South African economy rather than anything else, we believe that our investments are very well poised for future growth and for taking advantage of I think a lot of good things.

NASTASSIA ARENDSE:  Just earlier you were talking about Patrice Motsepe. If you don’t mind my asking, what has his role been since listing, and now? Does he put forward ideas in terms of what you should be investing in, etc?

JOHAN VAN DER MERWE:  That’s a very good question. Patrice – we’ve built very much a trust relationship with Patrice, Johan van Zyl and myself, during our time at Sanlam, and Patrice has given us this opportunity. Patrice is not involved in the sense that he’s meddling, but I had to tell someone this morning that every month Patrice sits down with Johan van Zyl and myself and Machiel Reyneke for the better part of a day, trying to understand what we are doing, what we’ve looked at, what we actually said we are not pursuing any further, and why we did that.

He brings opportunities to the table as well, putting [us in contact] with other people, etc. So he’s very interested; he’s involved in the sense that he wants to add value. But he doesn’t meddle in our affairs. He trusts that we will do the right thing. He also obviously chairs the board, sits on the investment committee, where Tom Boardman is the chairman of the investment committee – and Patrice is there. So he is very involved.

NASTASSIA ARENDSE:  And in terms of the outlook?

JOHAN VAN DER MERWE:  Given again that we are in South Africa, we are very, very optimistic and we remain optimistic about the changes on the government’s side. We believe that the right things will be done within the state-owned enterprises and in the finance department. So we are really very, very excited about the future, and we believe buying the right businesses at the right prices will then eventually be rewarded by the market as well.

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