/ 26 February 2019

Ayo: No grounds for PIC to recover R4.3-billion investment

Ayo: No Grounds For Pic To Recover R4.3 Billion Investment
Ayo: No grounds for PIC to recover R4.3-billion investment (Photo Archive)

Ayo Technology Solutions says there are no grounds for the Public Investment Corporation (PIC) to recoup the controversial R4.3-billion investment it made into the company, as directed by the Companies and Intellectual Property Commission (CIPC).

The PIC paid R43 per share for a 29% stake in Ayo, a company in which Independent media owner Iqbal Surve has an indirect stake. The price tag was flagged as hugely overpriced by employees working on the transaction before it was approved by former chief executive Dan Matjila.

Business Day reported on Tuesday that the Companies Act watchdog had sent a notice to the PIC to recover the R4.3-billion it invested in Ayo within 15 days of receiving the notice. This includes any interest that has accrued, which should be paid within six months.

In a Stock Exchange News Service (SENS) announcement sent out at 9am on Tuesday Ayo said it had not had sight of the compliance notice but said it would “formally respond via Sens to shareholders this morning, but believes the grounds for such recoupment have no merit and are baseless”.

According to the CIPC the high valuation that the PIC made on Ayo’s shares assumed that the company was worth R14.8-billion when it listed in December 2017, but in August 2017 Ayo’s financial statements showed that it only had total assets of R292-million and a net asset value of R67-million, Business Day reported.

The CIPC said it could not reconcile their valuation of the company with that of the PIC and as far as it was aware the company had not had a turnover during its existence of more than R12-million.

“The directors of the PIC are seen to have contravened section 76 of the act in which it is stated that a director may not use his position to “knowingly cause harm to the company”, Business Day reported.

The Ayo transaction has been at the centre of the PIC Inquiry probing issues of impropriety at the state asset manager which controls over R2-trillion in state worker pensions and other assets.

The PIC’s investment in the ICT company and the speed at which the transaction was concluded has received media scrutiny since Ayo made the announcement that it would list on the Johannesburg Stock Exchange in 2017.

On Monday PIC head of corporate affairs Deon Botha testified that following the testimony by various PIC employees at the commission since January, he had come to realise that the PIC had lied to the media when questioned about the transaction.

Reading a media Inquiry from City Press and Business Day, asking why due diligence processes were waived for the Ayo investment days before it listed on the JSE, Botha said the PIC had previously responded that all due diligence was done and concluded in November 2017.

Previous testimony by assistant asset manager Victor Seanie and head of internal audit Lufuno Nemagovhani indicates that due diligence reports were not complete by the time Matjila unilaterally signed the subscription agreement on December 14 2017, ahead of the deal being approved by the requisite committee.