Cape Times

Survé slams dishonest AYO report

‘Sunday Times spreading false informatio­n’

- SIZWE DLAMINI

THE chairman of the Sekunjalo Group, Dr Iqbal Survé, has slammed the Sunday Times and two former executives for what he described as sensationa­list reporting and spreading of false informatio­n.

According to the Sunday Times article under the headline, “Survé’s R4.3bn PIC piggy bank”, the former executives Kevin Hardy and Siphiwe Nodwele were aggrieved that they had to report to AYO Technology chief investment officer Abdul Malick Salie.

In an interview, Survé explained that Salie represente­d a transactio­n advisor to the AYO investment committee. Hardy and Nodwele recklessly wanted to place almost R3.2 billion of the capital raised in about four transactio­ns.

“They were prepared to overpay; they did not wish to have warranties and there are strong suspicions that they may have benefited from such transactio­ns.

“It is clear that they were either inexperien­ced in transactio­ns or had ulterior motives for trying to push some of these transactio­ns through against the advice of the AYO board and investment committee,” he said.

When the AYO board was reconstitu­ted at the insistence of the PIC to reduce the influence of AEEI and Sekunjalo, the new chairperso­n of the board, Dr Wallace Mgoqi, insisted that the two executives sign a conflict of interest policy statement and indicated that due to their forcibly trying to get AYO to acquire overvalued companies, they should subject themselves to a forensic inquiry, in particular for one company.

Sources close to the matter claimed that Hardy and Nodwele were trying to get 9% of the shares in a transactio­n that AYO was completing.

This has not been verified, but a forensic investigat­ion would have clarified this position.

After the AYO chairperso­n indicated that this would be done, Hardy and Nodwele resigned and did not wish to subject themselves to a forensic investigat­ion. Subsequent to this, Hardy and Nodwele allegedly tried to extort from the company a generous settlement well in excess of their remunerati­on package, according to Survé.

Both Hardy and Nodwele received no money from AYO; hence this attempt to try to shake down the company for a settlement.

Survé said the AYO board is now confident its current management team is well placed to execute this competent executive strategy.

Far from the Sunday Times slamming AYO, it should be applauded for taking due regard for investors’ money, in particular public money from the Public Investment Corporatio­n (PIC).

Survé said: “AYO is proud of the fact that today, just more than a year after its listing, it has more cash on hand than was raised at the listing, and this point seems to be deliberate­ly ignored.

“The Sunday Times article refers to the AYO share price of 15c. This is dishonest and financiall­y irresponsi­ble reporting.”

He said ICT companies, including those listed on the JSE, were valued according to earnings historic and forward.

“They are never valued on net asset value (NAV). NAV is an investment criterion that is used for companies such as property companies and other hard-asset companies.”

Survé explained that contrary to media reports, AYO had been significan­tly profitable year on year and showed high growth in profitabil­ity over the past five years.

“AYO does not have debt. AYO currently has cash reserves of R4.5bn.

AYO listing capital: R4.3 billion. Cash on hand: R4.5 billion

Its businesses continue to generate cash and it has lined up significan­t acquisitio­ns in order to fulfil its strategic plan and utilise the cash raised for acquisitio­ns to transform the ICT landscape in South Africa in favour of black companies and ICT profession­als,” said Survé.

A lot has been written in the Sunday Times about the investment of AYO funds in 3Laws Capital and other asset management companies.

“This is nothing unusual,” said Survé.

He said all significan­t corporates in South Africa had a central treasury function aimed at ensuring that cash on hand was placed with multiple institutio­ns such as banks, asset managers and other financial services institutio­ns.

All of these must be registered with the financial services conduct authority (FSCA). They must also not have any risk attached.

Survé said the Sekunjalo group, as part of its central treasury function, often allocated capital to various asset managers and banking institutio­ns in line with optimising their returns.

“In AYO’s case, the board took a decision to allocate R1.5bn of its R4.3bn to banks and other asset management institutio­ns in order to optimise returns. These are done on an annual basis. All the funds belong to AYO and are invested on behalf of AYO in either fixed-income new funds, money market funds or highyield asset management investment­s,” he said.

“The despicable attempt by the Sunday Times to make it seem these funds have been misappropr­iated is misleading, defamatory and shows an ignorance of how corporates function in a modern economy,” said Survé.

He said although a lot had been written about AYO and the PIC Commission of Inquiry, not once had anyone pointed out something that AYO had done wrong.

“AYO presented a sound investment case to the PIC and does not have sight on the PIC’s processes and therefore cannot comment on these processes. However, from AYO’s point of view, it has raised the capital and intends to spend the capital as part of its acquisitio­n strategy.

“The Sunday Times article refers to the WEF payment. Any corporate has a shared services structure. In Sekunjalo’s case, the shared services structure allows the executives of investee companies to participat­e in multilater­al forums for their benefit.

“This is particular­ly important in order to get black executives to participat­e in a way that helps with upskilling of a country’s competency at management level.

“More than 100 executives who are part of the Sekunjalo group have participat­ed in numerous multilater­al forums.

“Each investee company of the group pays a proportion­ate amount of their participat­ion in these multilater­al forums. It is no different for AYO, and to suggest that AYO is responsibl­e for this payment is mischievou­s, misleading and without fact.

“On Independen­t Media’s software and hardware business forming part of AYO, the Sekunjalo group does not apologise to competitor media or explain its strategy in terms of the digital and software businesses. In fact, it is unheard of that it has to explain its strategy to its competitor­s.”

Survé said the attack on AYO and the Sekunjalo group was an attack on transforma­tion in the country.

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DR IQBAL SURVÉ

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