Public Investment Corporation (PIC) shares in companies such as Anglo American were sold in order to free up funds to invest in Ayo Technology Solutions.
This is according to testimony given before the PIC commission headed by retired Judge Lex Mpati on Tuesday.
Gaanwe Adams, the portfolio manager of listed investments, told the commission she and two of her direct line managers — Lebogang Molebatsi and the executive head of listed investments Fidelis Madavo — received an email from former chief executive Dan Matjila “which said we should create liquidity to settle the subscription of Ayo shares”.
Adams said from her recollection, shares in various companies totalling between R3.7-billion to R3.8-billion were sold to cover the vast sum of the R4.3-billion that was needed for the Ayo investment. This price was flagged as overinflated by employees in the transaction team.
Matjila made the request on December 19 2017, just days after he had signed an irrevocable subscription agreement binding the PIC to invest in Ayo. This was despite the fact due diligence had not been completed and the relevant portfolio committee was not given the opportunity to approve the transaction.
Adams could not tell the commission how much in losses the PIC incurred from having to liquidate its stocks at that particular moment in time or what was liquidated.
However, Matjila’s first email instruction sent to Adams’s superior had detailed that liquidity should be created “by selling Anglo only”.
Adams will furnish the commission with more details at a later stage.
“We checked what would be liquid for [us] to sell and in order to settle on December 21 and then the second thing would be is ou actually the right time for us to be liquidating those positions without unnecessarily creating losses for the clients,” Adams explained.
She said Matjila then gave them an instruction via email to go ahead with the payment on Ayo even though it had not been ratified by the committee. “I do not recall a transaction whereby the payment was signed before [portfolio monitoring committee approval],” said Adams added.
The payment to Ayo was loaded onto the PIC system in two parts on December 20 2017, Adams said. The first was for an amount of R500-million, followed by another of just under R3.8-billion.