AEEI prepares another listing

• Technology arm’s debut on JSE in 2018 is expected to be much bigger than the Premfish spinoff by value

Shares in black-controlled African Empowerment Equity Investments soared on Friday after news that the group would list its technology arm on the JSE in 2018. This will be the second “spin-off” listing for AEEI. In March, it separately listed Premier Fishing and Brands, which has a market capitalisation of more than R1bn.

The share price of black-controlled African Empowerment Equity Investments (AEEI) soared on Friday on news that the group will list its technology arm on the JSE in 2018.

This will be the second “spinoff” listing for AEEI. In March, it separately listed Premier Fishing and Brands (Premfish), which has a market capitalisation of more than R1bn.

On Friday, AEEI said that the board of directors had approved a proposal to list its technology subsidiary, AYO Technology Solutions, “subject to market conditions”.

AEEI shares finished more than 12% higher at 434c — although only 240,000 shares changed hands.

The shares are fairly illiquid, with empowerment tycoon Iqbal Survé holding more than 60% of the shares and investment company Miramare another 11%.

AEEI CEO Khalid Abdulla said AYO could list within three to six months but he cautioned that certain permutations around possible deals might result in a listing only in the second half of 2018.

The CEO was reluctant to be drawn on details around the listing, but he confirmed AYO would follow the same modus operandi as the floating Premfish on the JSE.

“We will look to issue new shares to new investors, but the size of the listing will be much bigger than Premfish.”

AEEI would look to retain a controlling shareholding of between 51% to 55% of AYO, Abdulla said. of

AYO, which holds a number of technology services businesses and a 30% stake in British Telecoms SA, was valued at R2.2bn at the end of the interim to February 28.

In a half-year results investor presentation earlier in 2017, AEEI disclosed that AYO’s turnover had more than doubled to R234m in the interim period.

At that time, Abdulla believed AYO could produce bottom-line profits of close to R150m by financial 2018, adding that the company was still in acquisition mode and engaging with “numerous target companies”.

Aside from the valuable holding in British Telecoms SA, AYO’s operations span network services, collaboration services, system integration, enterprise security management, managed LAN (local area network) and IPT (internet protocol telephony services, audio technology, mobile solutions and strategic digital services.

AEEI is not well covered by mainstream institutional investors, but one market watcher noted that the AYO listing news came only weeks before the group released its year-end results. “This means the market — that hardly takes notice of AEEI — might pay a little more attention to the profits generated by AYO.”

What will be of particular interest is further disclosure around the performance of British Telecoms SA. A confidentiality agreement has precluded AEEI from disclosing information on British Telecoms SA’s performance to shareholders — aside from reassurances of regular dividend payments. JSE listing requirements, however, will demand more transparency around British Telecoms SA.

If the listing of AYO does take place, then more than 75% of AEEI’s value will be in investments listed on the JSE.

Aside from PremFish, AEEI also holds minority stakes in consumer brands giant Pioneer Foods and financial services specialist Sygnia.

JSE LISTING REQUIREMENTS WILL DEMAND MORE TRANSPARENCY AROUND BRITISH TELECOMS SA