Power Player profile: South African billionaire entrepreneur Patrice Motsepe

Power Player profile: South African billionaire entrepreneur Patrice Motsepe
Patrice Motsepe, founder and executive chairman of African Rainbow Minerals at the World Economic Forum on Africa 2015 in Cape Town. / World Economic Forum / Benedikt von Loebell
By Elena Kachkova in Johannesburg October 13, 2023

South African mining billionaire businessman Patrice Motsepe, a household name in his country, is the founder and executive chairman of African Rainbow Minerals (ARM), a diversified mining and minerals company with extensive domestic operations and projects in Malaysia.

ARM mines and beneficiates iron ore, manganese ore, chrome, platinum group metals (PGMs), nickel and coal, according to its website. It also has a strategic investment in gold through Harmony Gold, his country’s biggest gold producer by volume. 

Motsepe also sits on the boards of several companies with interests as diverse as energy, renewables, banking, investment, insurance, financial services, telecoms, agriculture and IT.

In addition, he owns 100% of Mamelodi Sundowns, a professional football club that plays in the South African Premier Soccer League and has been president of the Confederation of African Football (CAF) since March 2021. Motsepe also owns 37% of Blue Bulls, a professional rugby union team that plays in the South African Currie Cup and Super Rugby competitions.

Motsepe became the first black African dollar billionaire on the Forbes list in 2008. In 2012, he was named South Africa’s richest man with an estimated fortune of ZAR20.07bn ($1bn). According to Forbes 2023 ranking, he is currently the 9th richest man in Africa and the 1,318th wealthiest person in the world with a reported fortune of $3.2bn.

Early life and education

Patrice Tlhopane Motsepe was born on 28 January 1962 in Ga-Rankuwa, a township near Pretoria, to Kgosi Augustine Motsepe, a chief of the Mmakau branch of the Tswana people. He was named after the first prime minister of the independent Democratic Republic of the Congo Patrice Lumumba. His second name, Tlhopane, means “the chosen one.” Although he grew up in the apartheid era, Motsepe fared better than many other South African blacks.

His father owned a Spaza shop, a small outlet providing everyday essentials to mine workers. He became a successful liquor distributor by affiliating with South African Breweries. Patrice began his business training at the age of six in his father’s shop where he learned basic business management.

Because of his father’s opposition to South Africa’s segregated public school system, Motsepe and his six siblings attended a Roman Catholic boarding school in Eastern Cape province, writes Britannica.

Later, he graduated from the University of Swaziland with a Bachelor of Arts degree. He also attended the University of Witwatersrand, from where he earned his law degree, specialising in mining and business law.

Family

Motsepe is married to Precious Moloi, a physician and fashion entrepreneur, and they have three children.

His sister Tshepo Motsepe, a physician and businesswoman, is married to Cyril Ramaphosa, the President of South Africa. She became the First Lady of South Africa in 2018.

His other sister Bridgette Radebe, a mining magnate, is married to former minister Jeff Radebe, an influential member of the ruling African National Congress (ANC) party. Radebe served as Minister of Public Works, Minister of Public Enterprises, Minister of Transport, Minister of Mineral Resources and Energy, Minister of Justice and Constitutional Development, and Minister in the Presidency under different presidents.

Career

Motsepe joined the law firm of Bowman Gilfillan in 1988 and became the first black lawyer to be made a partner in 1994, having worked as a visiting attorney with the American law firm McGuire, Woods, Battle & Booth in 1991–92.

At the time when Nelson Mandela became South Africa’s first black president, the government began promoting black economic empowerment (BEE). Motsepe found ways to benefit from the country’s BEE laws, which then required companies to have a minimum 26% black ownership before a mining licence would be granted.

In 1994 he founded Future Mining, which provided contract mining services. Motsepe used a system of worker remuneration that combined a low base salary with a profit-sharing bonus to transform less productive shafts into money-making operations.

In 1997, when the price of gold was low, Motsepe launched ARMGold, and bought marginal gold mines from AngloGold for a reported $8.2mn under favourable financial terms, allowing him to repay his debt out of the future earnings of his company, according to Entrepreneur Hub SA.

Building big business

ARMGold listed on the JSE in 2002 and merged with Harmony Gold Mining in 2003 to form the world’s 5th largest gold producer. ARMGold then merged with its previous partner Anglovaal Mining (Avmin). Avmin changed its name to African Rainbow Minerals (ARM) and Motsepe became the founder and executive chairman of ARM.

He did not stop with mining. In 2003, Motsepe created Ubuntu-Botho Investments (UBI), and he currently owns 55% of it.

In 2004 UBI entered into a BEE deal with insurance and financial services company Sanlam. UBI initially acquired a 10% stake in Sanlam for ZAR1.3bn in 2004, which increased to 14.5% by 2018 through reinvesting dividends and share buybacks. 

In 2021, UBI again increased its shareholding in Sanlam through the acquisition of a 25% stake in its asset management business, Sanlam Investment Holdings, for a reported ZAR5.6bn, and now has an 18.1% voting stake in Sanlam as its BEE partner. Motsepe is currently the deputy chairman of Sanlam.

Sanlam’s latest multibillion-rand deal with Motsepe’s UBI attracted much controversy, according to News24. Some competitors of Sanlam were concerned that UBI’s deals would give Sanlam an unfair advantage in the financial services market, especially in the black segment. Critics pointed out that Motsepe was using his political connections and influence to secure lucrative deals with established white-owned companies like Sanlam, writes BusinessLIVE.

UBI in 2015 started African Rainbow Capital (ARC), a wholly-owned subsidiary of UBI. ARC’s joint chief executive is Johan van Zyl, a former executive of Sanlam.

ARC has holdings in more than 40 companies, including TymeBank (49%), industrial group Afrimat, agricultural company BKB, telecommunications company Rain, luxury property estate Val de Vie, and a minority stake in Alexander Forbes (14.9%), the pension fund administrator. ARC also has a 20% stake in Cape Town-based exchange A2X, according to Entrepreneur Hub SA.

TymeBank, a digital bank that offers low-cost banking services, is partnered with the Zion Christian Church (ZCC), the largest African-initiated church in Southern Africa with over 12 million members.

Energy entrepreneur

UBI also owns 100% of African Rainbow Energy and Power (AREP). Founded by Motsepe in 2012, AREP is focused on clean energy solutions including renewables, hydro, gas, and complementary transmission investments. AREP has invested in various energy projects and companies, such as SOLA Group, a solar photovoltaic (PV) company, in which AREP acquired a controlling 40% stake in 2020, writes Daily Investor.

AREP also holds a 15% shareholding in SunEdison, a 30% equity in the Ngodwana Biomass Project from Fusion Energy, and owns a 22.5% stake in wind power generators, Kangnas and Perdekraal East wind farms.

In 2021, AREP formed a joint venture with Absa Group Limited, a diversified financial services group, to create African Rainbow Energy (ARE), an African-led renewable energy investment platform. ARE has approximately ZAR6.5bn of gross assets, covering 31 renewable assets, making it one of the largest and most diverse independently owned energy businesses in South Africa. AREP holds 51% of the shares in ARE, while Absa holds 49% of the shares.

Philanthropy

In 1999, Motsepe founded The Motsepe Foundation, a charitable organization that aims to improve the quality of life for the poor, unemployed, and marginalised people in South Africa and Africa.

In 2013, he became the first African to join The Giving Pledge, a campaign started by Bill Gates and Warren Buffett that encourages billionaires to give away at least half of their wealth to philanthropy. Motsepe pledged to donate half of his family’s wealth during his lifetime or after his death.

In 2018, Motsepe pledged ZAR3.5bn (about $250mn) towards South Africa’s controversial land reform programme, IOL reported.

He said that he wanted to give a moment of hope for all the people of the rainbow nation, and that he was committed to working together with other leaders to ensure that the land reform process would result in land with the requisite support and skills being made available to black people living in rural areas.

In 2020, he donated ZAR1bn to help fight the COVID-19 pandemic in South Africa.

Scandal

According to the Economic Freedom Fighters (EFF) opposition party, Motsepe's company AREP benefited from the state-run power utility Eskom’s ZAR1.4bn contract in 2019, but this claim was denied by Motsepe, as reported by Engineering News. The contract was to supply emergency power to the grid from solar PV and wind projects.

The EFF accused President Cyril Ramaphosa of pushing for the unbundling of Eskom to benefit his brother-in-law’s company. The party also accused Energy Minister Jeff Radebe, who is another brother-in-law of Motsepe, of awarding lucrative contracts to AREP without following proper procurement processes.

Motsepe said at the time that AREP was not among the four independent power producers (IPPs) that won the Eskom contract, Eyewitness News (EWN) reported. In October 2022, Eskom announced that the four IPPs were HDF Energy South Africa, Red Rocket, The Sola Group, and South Africa Mainstream Renewable Power Developments. AREP acquired its controlling 40% stake in the SOLA Group in 2020.

Motsepe is implicated in the infamous Phala Phala scandal about an alleged theft of $4mn from Ramaphosa’s game farm in Limpopo province in 2020, The South African reports.

According to Arthur Fraser, the former head of the State Security Agency, who filed a criminal complaint against Ramaphosa in June 2021, the money was part of a bribery scheme involving Ramaphosa and Motsepe, who allegedly paid inflated prices for stud cattle at an auction held at the farm in March 2020 in exchange for favourable government contracts and regulations in the mining and banking sectors.

The scandal has sparked public outrage and political debate in South Africa, as it raised questions about Ramaphosa's integrity, transparency, and accountability, as well as his relationship with Motsepe, who is one of the richest men in Africa and a major donor to the ruling ANC party.

Motsepe is involved in other controversies surrounding his CAF presidency and personal life and his actions are often seen as benefiting family members, be it through making a ZAR30mn donation to the University of Cape Town (UCT) in 2021 where his wife was a chancellor, or appointing his son Thlopie Motsepe as Mamelodi Sundowns new chairman after he became a new president of CAF.

Motsepe has always rejected all claims of favouritism as “misrepresentations and lies”, according to Engineering News, but has admitted that there is a serious “perception problem”. He continues to insist that his business relationship with the government is legal and above board.

“Even if I didn’t have these relatives in government, I have a fundamental duty and obligation not only to be transparent but also ethical and accountable,” Motsepe said as quoted by EWN.

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