CHRIS GILMOUR: Market at odds with African Rainbow’s valuation of unlisted investments

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African Rainbow Capital Investments’ discount to NAV remains stubbornly wide

31 March 2020 - 16:04Though some investors have started looking closely at African Rainbow Capital Investments as a possible value stock, its share price has been a truly dismal performer since listing in 2016, losing 75% during that period while net asset value has hardly moved.

Discount to NAV has widened significantly. As a rough rule of thumb, discount to NAV should typically be in the range of 20% to 30%. But even before the share price collapse in equity markets triggered by the coronavirus outbreak, ARCI’s discount was already much wider. In December 2019, the intrinsic NAV was 952c per share, compared with the current share price of 260c, making that a 73% discount to NAV.

 

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The true gem of Rainbow's treasure should be Rain. All the other stuff come second to it. With that said, valuation of an asset based on how much money it might make in the future will always be tricky.

I knew this was about to start, simply because of the R1billion donation. It's simply because people are aware that the other billions aren't really donations

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