African Rainbow Capital Investments Limited (ARCI), an investment holding company with significant stakes in Rain and TymeBank, has announced plans to acquire all issued ordinary shares not already held by its affiliates, African Rainbow Capital Proprietary Limited (ARC) and K2025167229 (South Africa) Proprietary Limited (ARC SPV). This transaction is intended to facilitate the company’s delisting from the Johannesburg Stock Exchange (JSE) and A2X Markets, along with a shift in its registered domicile from Mauritius to South Africa. The offer extended to shareholders is priced at ZAR9.75 per share, representing a 12.6% premium over the closing price of ZAR8.66 as of 14 March 2025 and a 21.0% premium over the 30-day volume-weighted average price of ZAR8.06. However, the offer remains 22.8% below the net asset value per share reported in ARCI’s most recent interim results.
ARCI has attributed this decision to several factors, including the limited liquidity of its shares in the public market. With the majority of its shareholders being South African residents, the stock has struggled to attract significant trading volumes, resulting in a persistent discount to the net asset value of the ARC Fund. This discrepancy has hindered the stock’s ability to reflect the actual worth of its underlying investments. The company’s decision to relocate its domicile from Mauritius stems from strategic and financial considerations. Initially, Mauritius was chosen for its business-friendly regulatory environment and extensive network of double taxation agreements, which were expected to attract foreign capital and facilitate international investments. However, ARCI has noted that these advantages have not materialised as anticipated, given that its investments remain overwhelmingly South African-focused. Furthermore, maintaining operations from Mauritius has led to higher administrative costs, while recent changes in South African tax legislation have created inefficiencies for domestic shareholders in managing their underlying investments.
The proposed delisting and re-domiciliation remain subject to various approvals. ARCI’s Board of Directors must first secure shareholder consent for resolutions related to both the delisting and re-domiciliation. These approvals will be essential before the company can formally apply to the JSE for delisting and proceed with the administrative process of transferring its domicile to South Africa. In addition to shareholder approval, regulatory clearance is required from both the JSE and the Financial Surveillance Department of the South African Reserve Bank, which oversees the country’s exchange control framework.
A detailed shareholder circular outlining the offer, delisting, and re-domiciliation process will be distributed in due course. This document will include an assessment by the Board, recommendations for investors, and an independent expert’s fairness opinion to guide shareholders in making an informed decision. Investors are advised to carefully review the contents of the circular before responding to the offer.
The move marks a decisive restructuring of ARCI’s operational model as it seeks to align its corporate structure with its investment portfolio, which remains primarily South African. By addressing the challenges associated with its current listing status and foreign domicile, the company aims to enhance shareholder value, streamline operations, and ensure a more efficient tax and regulatory framework for its stakeholders.
