Businessman Patrice Motsepe-controlled African Rainbow Capital (ARC) has made an additional investment of R295 million in digital bank TymeBank and telecommunications company Rain.
This emerged when the JSE-listed ARC today published its annual financial results for the year ended 30 June.
ARC is a holding company that acquires minority interests in unlisted and listed businesses at a discount by leveraging its empowerment credentials. The company manages a portfolio of 49 mainly South African investments, valued at R20.2 billion.
The company says it made additional investment in Rain and Tyme Group, of R126 million and R169 million, respectively.
It adds that seven-year-old Rain generated an earnings before interest, taxes, depreciation and amortisation of R2.5 billion and was ranked as SA’s most liked network provider in the DataEQ/PwC Telecommunications Industry Index 2023, resulting in a fair value gain of R598 million.
According to ARC, TymeBank’s customer base increased to 9.5 million, while Philippines-based GOtyme attracted 3.6 million customers within 18 months since its launch.
It notes Tyme Group’s recent pilot in Vietnam is also performing well, and has announced plans to enter Indonesia before the end of 2024.
Rain is controlled by diverse shareholders, including Quarme Private Equity (Paul Harris): 41.36%; ARC: 20.25%; Pluvial: 11.75%; Montegray Capital (Michael Jordaan): 11.53%; and Ata Fund 1: 6.42%.
It offers wholesale services to other telcos and retail products directly to consumers across 4G and 5G networks. The telco launched its direct 4G retail services in 2018, and the continent’s first 5G standalone network in 2019.
Rain has a portfolio of licensed spectrum that features capacity and coverage bands, having acquired additional spectrum of 2x10MHz of 700MHz and 20MHz of 2 600MHz in the spectrum auction in 2022.
“Rain has solidified its position as an affordable data and mobile service provider and continues to experience substantial subscriber growth,” says ARC in a statement.
“While risks persist, Rain is well-positioned to manage them and further establish itself as a trusted brand in South Africa. As of 30 June 2024, the valuation of the ARC Fund’s shareholding in Rain increased by R598 million from June 2023, taking into account acquisitions of an additional R126 million,” it adds.
‘Strong’ customer acquisition
TymeBank is a digital bank with one of the largest cash-in and cash-out networks in South Africa, due to its retail partnership network with Pick n Pay, Boxer and The Foschini Group.
According to ARC, TymeBank has shown strong customer acquisition, surpassing the 9.5 million customer milestone this year, with increasing activity per customer.
Deposits have grown by 59% to R6.5 billion, and merchant credit advances have risen to R1.8 billion, ARC says, adding that the full range of banking products offers value to customers, giving the bank many levers for growth.
“The operational leverage provided by technology is clear – net operating income tripled year-on-year, while costs increased by 10%. TymeBank reached breakeven in December 2023, and sustained profitability is expected in the coming months,” says the firm.
Tyme Global is a holding company based in Singapore. It is the platform through which multi-country banks are being launched. GoTyme in the Philippines was launched in November 2022, and by June 2024, GoTyme had achieved a milestone of 3.58 million customers, says ARC.
It states that the growth trajectory of the model is strong, with activity rates exceeding those of South Africa and deposits growing faster than anticipated.
ARC explains that the Retail Capital Merchant Cash Advance product was introduced in November 2023, and in June 2024, GoTyme Bank acquired Savii, a payroll lender in the Philippines, to leverage the growing deposit base.
The bank is expected to reach profitability in Q4 of 2025, says the company. It notes that in Vietnam, the third country in the expansion plan, the merchant cash advance product is being piloted as the company progresses through the contracting stages with in-country partners.