African Rainbow Capital acquired a 25 percent stake in South Africa’s estate planning company Capital Legacy, a business that specializes in will drafting and estate administration. Through the buy, Patric Motsepe’s investment firm will complete its participation in the entire financial services value chain.
May this year, the Johannesburg Securities Exchange-listed investment firm said it has more than USD 50 Mn to spend on acquisitions in the financial services sector.
ARC, with stakes in Alexander Forbes, Santam, Tymebank, and other insurance firms, looks to multiply share in financial service companies in its portfolio – which is currently at 20 to 30 percent.
By buying seven-year-old Capital Legacy, ARC stays in the trail of its previous deals, investing in disruptive startups such as alternative stock exchange A2X, Michael Jordaan’s data operator Rain and AI venture Ethos Artificial Intelligence Fund.
The deal reportedly took nine months to complete, before which Capital Legacy had met with other suitors before settling with ARC. The investee did so because of the investment firm’s hands-off approach.
The South African real estate firm has been around since 2012 since when it has drafted wills for 5,000 people each month, having a 200,000 will record in total.
Nevertheless, most of the company’s administration work is not the clients it has helped to draft wills. It gets referrals from a network of more than 4,000 brokers it has contracted.
Capital Legacy who makes its money by offering insurance to clients, calculates how much people will need to pay in estate taxes. This also includes executor’s costs and other fees related to assets they want to leave as inheritance.
“We got to the point where we needed a big brother to provide us with BEE credentials. We needed a partner who has scale and the means to help fund our growth. On top of that ARC brings massive credibility,” Capital Legacy founder and CEO Alex Simeonides told Fin24.
For us, the next step now that we are part of the ARC stable is to see how we can take our fiduciary services into other ventures as well. For instance, how we could help TymeBank [of which ARC is a shareholder] clients to have their wills done,” said Simeonides.”
“From my personal point of view, the most important aspect is that we now have a credible institution with proper backup behind us to show we can deliver on promises we make.”
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