Billionaire Patrice Motsepe-controlled African Rainbow Capital (ARC) has pumped close to R2 billion into digital bank TymeBank.
This emerged yesterday, when ARC announced its interim financial results for the six months ended 31 December.
ARC holds an effective 57.7% stake in TymeBank, which bills itself as South Africa’s first digital-only bank.
In a statement, ARC says TymeBank remains a leading digital bank, with 6.2 million customers as at 31 December.
It adds that TymeBank and The Foschini Group (TFG) launched a partnership, installing 600 kiosks across 22 TFG brands, almost doubling the digital bank’s reach across South Africa.
In January, TymeBank and retailer TFG expanded their partnership, introducing co-branded financial products and services both in-store and on digital platforms.
They first joined forces in October 2021, when TymeBank and TFG said plans were afoot to offer a full range of financial products and develop new services.
In the period under review, ARC says TymeBank acquired Retail Capital to support the digital bank’s business banking offering.
It adds the valuation of TymeBank was adjusted at 31 December to reflect the Series B3 capital raise that was concluded to fund the acquisition of 100% of Retail Capital.
ARC Fund contributed $30 million of the $60 million capital raise, so its shareholding remains at just over 50%.
Retail Capital is a South African provider of alternative business funding to small and medium businesses.
Its aim is to lower the barriers to funding for SMEs through a three-step online application process, and it has provided more than 43 000 business owners in SA with over R5.5 billion in working capital in the last 10 years.
Says ARC: “The company’s [ARC’s] effective investment in TymeBank, through the ARC Fund and ARC Financial Services Holdings (ARC FSH), is R1 924 million.”
Meanwhile, outside of South Africa, TymeBank's international arm, Tyme Global, recently launched its digital bank, GOtyme, in the Philippines with its partner, JG Summit.
ARC notes the fair value of the Tyme Global investment was adjusted to reflect the post-money value of the recently closed capital raise, resulting in a 39% increase in fair value through the ARC Fund and ARC FSH to R696 million.
It adds the prospects of Tyme Global and the thesis around building a multi-country digital bank at scale are starting to come to fruition.
“During the period under review, the value of ARC Fund’s effective investment in ARC Investments reduced from R700 million at 30 June 2022, to R587 million at 31 December 2022, due to a decline in the share price.”
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