ARC Aims to Remove Itself from the JSE Listing

African Rainbow Capital (ARC), which is supported by billionaire Patrice Motsepe, has announced its intention to delist from the JSE in a statement released on Sens this Tuesday morning.

The company is proposing an offer of R9.75 per share to its shareholders.

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African Rainbow Capital’s share price rose to R9.12 during early trading, marking a 4.47% increase from the previous day.

The statement indicates that the offer represents a 12.6% premium over the closing price of R8.66 per share and a 21% premium relative to the 30-day volume weighted average price of R8.06 per share as of market close on Friday, 14 March. Additionally, it reflects a 22.8% discount to the net asset value per share as detailed in the ARC interim results announcement issued earlier today.

Read the Sens here.

Furthermore, the group intends to relocate its headquarters from Mauritius to South Africa. This proposed delisting and headquarters move are contingent upon shareholder and regulatory approvals.

Rationale

In the announcement, ARC highlights that public shareholding is limited as almost all shareholders are South African, resulting in reduced liquidity in ARC shares.

The share price of ARC does not accurately represent the true value of the investment in the ARC Fund. It trades at a discount to the fund’s net asset value, implying that ARC investors are not obtaining the actual value of their investments.

“It is expected that the offer will provide a return of value for investors,” it states.

The company adds that the initial reasoning for listing ARC in Mauritius was due to its investor-friendly environment, the tax treaties Mauritius possesses, and the potential to draw capital from investors beyond South Africa.

“This strategy has not developed as anticipated. ARC attracted limited international investment, with no support from the Mauritian structure. Furthermore, ARC primarily invests in South African firms.”

ARC observes that managing operations in Mauritius has become increasingly costly.

“Moreover, changes to tax regulations since ARC’s listing have rendered the tax inefficiencies for South African resident ARC shareholders in relation to the underlying South African investments obsolete.”

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