Alexander Forbes in talks with Motsepe’s ARC over AfriNet - source

Johannesburg - Alexander Forbes [JSE:AFH] is in talks to sell a stake in its AfriNet unit to African Rainbow Capital (ARC), according to a person familiar with the matter.

African Rainbow Capital, chaired by billionaire Patrice Motsepe, plans to use the AfriNet acquisition to expand its operations outside South Africa, the person said, asking not to be identified because talks are private.

Motsepe, 54, the richest black South African with a fortune of R23.62bn, started ARC in April with access to as much as R17bn in capital to build a financial-services company controlled by black people and spanning everything from life insurance and healthcare to money management and banking. AfriNet offers insurance and risk management services in 30 African countries.

ARC co-CEO Johan van Zyl declined to comment. Lynn Stevens, a spokesperson for Alexander Forbes, declined to comment.

Profit growth

Companies in South Africa have sold stakes to black investors to compensate for discrimination under apartheid, which ended in 1994, with the economy still controlled by the white minority. Alexander Forbes said in March it started talks with a black-owned partner about an investment in the group’s African subsidiaries and it said on July 25 the talks are still ongoing.

In the fiscal year ended March, AfriNet’s profit from operations grew 23% to R74m and its assets increased more than 9% to R4.33bn, according to Alexander Forbes’ annual report. AfriNet’s contribution to group profit has risen to 6.1% by March from 4.7% two years ago.

Alexander Forbes, which had an initial public offering in 2014 after its private equity owners exited the investment, is 33% held by Marsh & McLennan’s Mercer unit, according to data compiled by Bloomberg.

Shares in Alexander Forbes have gained 9.6% since the start of the year, giving the company a market value of R8.7bn.