ARC’s Smart Moves: Portfolio Growth and Expansion in a Complex Market

Several key factors impacted the ARC Fund portfolio during the review period, both positively and negatively. The national election and the establishment of the Government of National Unity (GNU), along with lower inflationary pressures and reduced levels of load shedding decreased the uncertainty faced in previous periods.

However, high interest and unemployment rates, declining consumer spending, the uncertain implementation and impact of GNU policies, and a volatile foreign exchange environment continue to create challenging trading conditions for some of our portfolio companies.

In this context, it is encouraging to note that ARCI’s diverse investment portfolio has demonstrated resilience despite the difficult macroeconomic environment. Additionally, these challenging conditions have created opportunities that we believe our investment portfolio is ideally positioned to benefit from.

HIGHLIGHTS

Portfolio Highlights:
Pleasing advances at several key investments:

• Rain – strong performance of rainOne and Rain mobile offerings
• TymeBank – 10.7 million customers and increased activity per customer
• Tyme Global – GOtyme customer base has more than doubled to 5 million
• Alexforbes – strong share price performance on the back of solid results and positive outlook
• Linebooker – several large industry-leading customers onboarded and impressive growth in revenue and profit
• Acorn Agri – right-sizing the portfolio and driving exits

Collaboration within the financial services ecosystem:

• Sanlam Life disposal of its shares in ARC Financial Services Investments (ARC FSI) in exchange for shares in ARC FSH.

Financial Performance:

• Meaningful reduction in discount at which share price is trading
• Intrinsic net asset value (INAV) growth of 4.1% at R19 385 million (30 June 2024: R18 616 million)
• INAV per share increased by 3.2% to R12.78 (30 June 2024: R12.38)
• Cash in the ARC Fund increased to R575 million (30 June 2024: R163 million), as a result of the transactions with Sanlam
• Debt in the fund reduced by 5% to R1 639 million (30 June 2024: R1 725 million), as a result of the transactions with Sanlam
• R698 million of additional investments, including R393 million in Kropz and R233 million in ARC FSH
• Net revaluations of R840 million, of which 32% relates to share price performance in ARC Investments and 42% relates to ARC FSH
• Return of capital of R1.6 billion by ARC FSH to its shareholders and sale of Tyme Group asset by the ARC Fund to ARC FSH, for R517 million

PERFORMANCE

The Company’s intrinsic investment value in the ARC Fund increased by 4.1% from R18 616 million at 30 June 2024 to R19 385 million at 31 December 2024. During the period under review, the Company’s effective share of the invested assets (or the IPV) increased by 1.4%, from R20 189 million at 30 June 2024 to R20 467 million at 31 December 2024. The IFRS NAV per share increased by 3.6% from R12.34 at 30 June 2024 to R12.78 at 31 December 2024.

EVENTS AFTER REPORTING PERIOD

Alexforbes

Due to the cancellation of shares in Alexforbes the shareholding of ARC FSI increased from 44.49% to 45.83% of the total issued ordinary shares of AlexForbes.

Proposed delisting and re-domiciliation of African Rainbow Capital Investments Limited and offer to shareholders

Shareholders are referred to the simultaneous announcement by African Rainbow Capital Investments Limited (‘ARCI’) today, Tuesday, 18 March 2025 regarding a conditional cash offer by African Rainbow Capital Proprietary Limited and K2025167229 (South Africa) Proprietary Limited, as joint offerors, to ARCI shareholders to acquire all the issued shares in ARCI, not already owned by the joint offerors, proposed delisting of ARCI’s shares on the JSE and A2X stock exchanges and proposed re-domiciliation of ARCI from Mauritius to South Africa.

GOVERNANCE

ARC Investments is managed and controlled in Mauritius by an experienced, multi-national Board of Directors (the Board), of which the majority are independent. The Board has final oversight and responsibility in respect of ARC Investments’ business strategy and key policies, including the investment in the ARC Fund. There are no executive directors on the Board of ARC Investments.

ARC Investments is the only Limited Partner in the ARC Fund. It plays no role in the management or investment decisions of the ARC Fund.