TymeBank, backed by billionaire Patrice Motsepe’s investment group African Rainbow Capital (ARC), has signed on 1.9 million customers of which 50% were active at the end of June 2020.
Launched in November 2018, the digital banking startup said that it aimed to be at break-even by 2022, with a customer base of around 2.2 million
TymeBank, which makes up 8.3% ARC’s fund value (2019: 7.2%), is focused on banking the unbanked and under serviced in South Africa. ARC detailed the bank’s progress in a review of its financial results for the year ended June 2020.
It said that at the end of June 2020, the bank had on boarded 1.9 million customers, which is ahead of its business plan. “The bank is signing up between 3,000 and 3,500 customers per day, with half of the customers actively using their bank accounts.”
ARC said that the impact of Covid-19 on the bank has resulted in the delay in the roll out of its partnership with the Zion Christian Church (ZCC) as well as a change in its unsecured personal lending proposition.
“Responding to a significant change in market conditions, the bank’s management has introduced cost reduction measures, while also focusing on revenue diversification and partnerships activation.
“The progress to date, combined with the additional capital that has been injected, results in a fair value of R1.86 billion in ARC Financial Services at 30 June 2020 and therefore R927 million for the ARC Fund.”
ARC Financial Services injected an additional R750 million into TymeBank during the reporting period as part of the scheduled capital requirements for the new bank.
At 30 June 2020 the ARC Fund has an effective ownership interest of 35.18% in TymeBank, being its 49.9% of the 70.5% interest that ARC Financial Services holds in TymeBank. ARC Fund’s effective capital contribution to TymeBank was R374 million for the year ended 30 June 2020, it said.
ARC said its intrinsic investment in the ARC Fund increased by 2.1% from R9.74 billion at 30 June 2019 to R9.95 billion at year end. The Intrinsic Net Asset Value (INAV) of the Company increased from R9.34 per share at 30 June 2019 to R9.54 per share at 30 June 2020 which also amounts to an increase of 2.1%.
It said that whilst this is significantly below the medium to long-term hurdle rate of 16% per annum, it is indicative of and aligned to market performance in the current economic environment.
ARC’s investments also include data based mobile network operator Rain, MetroFibre, Alexander Forbes, and EOH.
“The year under review has been characterised by strained trading conditions, mainly resulting from the contracting economy. This has adversely impacted most of the companies in our portfolio. An already poor performing economy was exacerbated by the sudden onset of the Covid-19 pandemic,” it said.