South Africa: Interim Results – African Rainbow Capital Fast-Tracks Review of Its Fee Structure

Investment holding company says considerable changes in the global and domestic environment are behind its decision to review its fee structure.

African Rainbow Capital (ARC) Investments has decided to accelerate a review of its fee structure, which has raised many an eyebrow in the investment community.

The black-empowered investment holding company says that due to considerable changes in the global and domestic environment, it is in talks with its general partner in the ARC Fund to bring the review forward instead of waiting for the five-year anniversary of its 2017 listing, as previously planned.

ARC Investments has a 99.95% interest in the ARC Fund, which is managed by UBI, a subsidiary of Patrice Motsepe’s Ubuntu-Botho Investment. It listed at R8.50, a level based on the value of its investment portfolio as determined by its directors at the time. The management fees of 1.75% a year, plus 16% performance participation, are calculated off its net asset value (NAV).

After reaching R9.52 at the end of 2019, its intrinsic NAV reduced by 7.4% to R8.82, partly as a result of last October’s R750-million rights issue. That is still significantly higher than its current share price of around…

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