Hard choice for shareholders of billionaire Patrice Motsepe’s company that owns large stakes in Rain and Tymebank

African Rainbow Capital (ARC) has provided details about its offer to shareholders and its delisting plans, leaving shareholders with a difficult choice.

ARC Investments recently released a statement outlining the results of a general meeting held to vote on the company’s planned delisting.

The voting focused on delisting ARC Investments shares from the JSE and A2X stock exchanges.

Attendees also voted on relocating the business from Mauritius to South Africa and granting directors the authority to implement the issues voted on.

The overwhelming majority of shareholders voted in favour of all these resolutions, which means that the delisting of ARC Investments will proceed.

The last day to trade ARC investment shares is Tuesday, 20 May 2025, and the share listing will be suspended on 21 May 2025.

The consideration for accepting shareholders will be paid on 28 May 2025, and the delisting will take effect on 29 May 2025.

Shareholders who do not accept the offer will remain shareholders in African Rainbow Capital Investments (ARCI).

However, these shareholders will hold shares in a private company, which means that their shares would be less liquid.

This means that, after 28 May 2025, shareholders won’t be able to sell their shares on an exchange, but instead it will be traded over-the-counter (OTC).

OTC transactions occur when parties engage directly with each other, rather than taking place on an exchange.

In other words, if the shareholders decide to sell their shares, they will have to find buyers either directly or through an intermediary.

The offer to African Rainbow Capital Investments shareholders

ARC has offered shareholders R9.75 per share, which represents a 11.7% premium to the 17 March closing market cap of R13.3 billion, the day before the announcement was made.

This puts ARCIs delisting value at R14.8 billion. The valuation represents a significant discount over ARCI’s intrinsic net asset value (INAV).

ARCI stated that the business has an intrinsic value of R12.78 per share, which will put the company’s value at R19.4 billion.

This means that the delisting offer to current shareholders represents a 23.7% discount to ARCI’s stated net asset value.

Its delisting valuation discount to its own stated INAV shows that ARCI is not prepared to pay the INAV valuation for its stock.

ARCI’s current share price stands at R9.66 per share, representing approximately a 1% discount from the offer price of R9.75 per share.

Shareholders are faced with a tough decision:

• Sell their shares for R9.75, thereby forfeiting the possible INAV valuation, but cashing in a premium to the historic share price.
• Remain a shareholder in a private ARCI, forfeiting their liquidity but capitalising on the possibility of receiving ARCI’s INAV valuation when it sells the stock in the future.

Whatever their choice, they must make it within the next two weeks before the first option disappears.

This article was first published by Daily Investor and is reproduced with permission.