The equity investment team of the Public Investment Corporation (PIC) had, by December 13, 2017, “enough comfort” for it to make a R4.3 billion investment in AYO Technology Solutions for a 29 percent stake, Lebogang Molebatsi, the general manager of listed investments at the PIC at the time, told the Western Cape High Court yesterday.
Molebatsi was testifying in the PIC case to try to recover about R4.3 billion it invested in a stake in AYO, as part of a private placement prior to AYO listing on the JSE in December 2017. The PIC is the state-owned asset manager that invests mainly on behalf of the Government Employee Pension Fund (GEPF).
Under questioning by Nazeer Cassim (SC), legal representative of AYO, Molebatsi said he only became aware that PIC chief executive at the time, Dr Dan Matjila, had signed an irrevocable undertaking to do the deal already on December 4, long after the fact.
Victor Seanie, assistant portfolio analyst at the PIC in 2017, and the immediate junior to Molebatsi told the court last week, as the first witness in this case, that he had only seen the proof of this deal two days before the court case had begun.
He told the court he would have been very surprised had he known that Matjila had already signed off the document.
The subscription document had noted that the transaction was subject to due diligence being completed, to which Molebatsi had noted that two days before the subscription agreement ended was too short to do a proper assessment of the due diligence reports.
He said AYO’s forecasted revenue of R4.4 billion for 2018, compared with revenue of R479 million in 2017, and of revenue of R7.7bn in the 2018 financial year, were based on an anticipated accelerated programme of acquisitions within a short period post-listing, which had been expected to substantially boost revenue.
Molebatsi said he expected at the time that the listing of AYO was a doable investment for the PIC, in spite of his junior colleague Victor Seanie’s warning that the revenue forecast appeared optimistic, on the basis also that the relationship with British Telecom South Africa (BTSA), and its relationship with the global BT Group and the substantial research and development capital that went with it, as well as on the basis of AYO’s empowerment credentials in the local market, and the fact that AEEI 30 percent shareholding in BTSA “cemented” the relationship.
Earlier in the day, and in his final questions to Abdul Malik Salie, board director at AYO in 2017, he told the court he did not have the mandate to approve the authority required to answer a request from the PIC on December 8, 2017, to postpone the listing until the end of January, which was why the reply to this request was only sent to the PIC on December 14 of that year.
The case continues.
BUSINESS REPORT