African Rainbow Capital (ARC) is set to increase its stake in Alexforbes to nearly 80% following a $185m transaction, according to statements released by Alexforbes and Prudential Financial. The deal comes after Patrice Motsepe’s investment holding firm first bought into South Africa’s largest employee benefits provider and subsequently forced a sweeping overhaul of its corporate strategy.
Prudential Exit and Transaction Structure
US-based Prudential Financial decided to simplify its international footprint through the disposal of its emerging markets businesses, prompting ARC to pounce on the opportunity, according to official disclosures. Under two separate transactions valued at $185m, Alexforbes will repurchase about 372.8-million shares held by New Veld, which is Prudential’s entity. Simultaneously, ARC AF Holdings will acquire New Veld’s about 74.1-million shares.
David Legher, head of emerging markets at Prudential, stated that Alexforbes has been a successful investment for the group. According to Legher, the sale allows Prudential to narrow its focus on markets with the strongest long-term growth opportunities while positioning Alexforbes for success under a more concentrated ownership structure.
Depending on how the final mechanics play out, ARC’s stake will shift. According to Alexforbes filings, if both transactions proceed, ARC will hold 77.94% of the company, up from just under 50%. If only the specific share repurchase goes through, ARC will hold 69.95%, and New Veld will retain 7.99%. If only the direct ARC acquisition occurs without the company-level repurchase, ARC will hold 55.59%. The consolidation also clears a path for Alexforbes to potentially delist from the Johannesburg Stock Exchange (JSE), where ARC itself delisted last year.
Strategic Overhaul and Leadership Change
ARC first entered Alexforbes in 2016 with a 10% stake and steadily built its position over the years. According to historical company accounts, ARC’s leadership spearheaded a major strategic pivot that led to the ouster of former CEO Andrew Darfoor in 2018 following intense strategy clashes.
Johan van Zyl of ARC Investments led the charge against Darfoor’s “Ambition 2022” strategy. That previous plan had focused heavily on retail expansion and sub-Saharan bolt-on acquisitions. Van Zyl argued that the approach suffocated the share price and failed to deliver returns. He directed the firm to exit capital-intensive areas like life and general insurance where the company lacked scale, pivoting the focus back to advice and distribution.
Following Darfoor’s departure, Dawie de Villiers took over as CEO. De Villiers quickly executed the revised strategy, launched in March 2019, by selling the insurance business to Momentum for nearly R2bn and transitioning the sponsored umbrella fund to private administration. These moves slashed capital requirements, allowing Alexforbes to regularly return cash to shareholders via dividends and special dividends.
Growth and Market Performance
With a leaner operating model, Alexforbes expanded through targeted acquisitions and organic growth. According to corporate disclosures, the group bought six businesses over a three-year period, including TSA Administration to bolster risk insurance services and OUTvest to scale digital wealth management.
In 2024, the firm expanded into the R500bn discretionary fund management market, driving fresh retail asset inflows. The company’s share price has climbed more than 100% over the past five years, lifting the group’s market capitalization on the JSE to R10bn.
Did you know? Patrice Motsepe’s investment portfolio spans diverse sectors, with ARC also holding stakes in digital bank GoTyme and Rain.
Frequently Asked Questions
What is ARC’s new stake in Alexforbes?
ARC’s stake is set to rise to nearly 80%, specifically reaching 77.94% if all components of the $185m transaction close successfully.
Why did Prudential sell its shares?
According to Prudential, the sale is part of a global strategic review to simplify its international footprint and exit emerging markets businesses.
Could Alexforbes delist from the JSE?
Yes, the consolidation of nearly 80% of the company under ARC opens the door for a possible delisting from the Johannesburg Stock Exchange.
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