Empowerment investment holding company African Rainbow Capital (ARC) and alternative asset manager Ethos Private Equity have jointly announced an investment of R200-million by the Ethos Artificial Intelligence (AI) Fund and co-investors – jointly referred to as the Ethos Al Fund – in recently launched digital bank TymeBank.
The bank is majority owned by ARC, which will, in a separate transaction, invest a further R100-million into the Ethos Al Fund.
The strategic rationale for ARC investing in the Ethos Al Fund is to provide ARC access to an ecosystem where new technologies in support of the Fourth Industrial Revolution are optimally commercialised.
The investment by the Ethos Al Fund in TymeBank will result in the fund being an 8% shareholder in the bank.
The transaction value was agreed with Ethos’ management before the bank was formally launched in February.
Since TymeBank was launched, more than 400 000 clients have signed up for bank accounts, which is expected to lead to a considerable increase in the enterprise value of the bank.
Customer acquisition achievements are considerably ahead of targeted projections and the bank looks set to achieve 500 000 clients by July.
The current remaining shareholders in TymeBank are ARC, the founders and executive management of TymeBank and a staff trust.
TymeBank aims to be the leading low-cost transactional bank to the mass market segment, with these consumers typically underserved and underserviced.
The bank’s low-cost operating platform is enabled by innovative technology and its strategic relationship with Pick n Pay and Boxer stores.
Following the investment, TymeBank will also benefit by having access to a pool of knowledge and experience in the use of AI.
TymeBank and its controlling shareholder will soon embark on the next phase of capital raising to facilitate the growth of the bank.
“The Ethos Al Fund invests in businesses that will benefit disproportionately from AI, primarily in the form of algorithm decision-making,” commented Ethos Al Fund partner Roger Grobler.
He indicated that these algorithms typically help organisations make high-frequency decisions that are often not suited to human capabilities owing to the computational complexity and breadth of data used.
The Ethos Al Fund investment in TymeBank will result in representatives of the fund joining the board of Tyme Global, the international business of TymeBank that owns the technology.