Daily Maverick

Bad business has not dented Survé’s ‘billions’, or so he says

Despite years of controvers­y about companies failing to meet their financial obligation­s and other evidence that they’re bleeding money, Iqbal Survè reckons his ‘empire’ is cash rich and thriving

- Neesa Moodley Neesa Moodley is an associate editor at Business Maverick.

Self-proclaimed philanthro­pist Dr Iqbal Survé announced last week in an article published by Independen­t Media (of which he is chairperso­n) that he has repurchase­d assets valued at more than

R5-billion in industrial consortium Ayo.

Not only that, he went on to say that these investment­s “now become part of the Survé private empire with tens of billions of rand worth of investment assets (more than 200 companies) and a cash pile of several billion rand in South Africa”. The article further noted that the Survé family office in Switzerlan­d manages a fund of several billion dollars in partnershi­p with two Middle Eastern royal families.

The news is surprising given the quagmire of financial issues and controvers­y surroundin­g the entities linked to Survé. First, the banks have refused to deal with several of his companies. Then there are the controvers­ial Public Investment Corporatio­n (PIC) settlement and the delisting of African Equity Empowermen­t Investment­s (AEEI). And don’t forget the lawsuits that two of Survé’s companies instituted against the government and Cyril Ramaphosa.

Shut out by the banking industry

When it comes to money, the first red flag is that the banking industry (FNB, Nedbank, Mercantile Bank and Standard Bank) started closing their doors last year to Sekunjalo and related entities, including Independen­t Newspapers, owing to reputation­al risk.

In July, the Competitio­n Appeal Court handed down a judgment in favour of Standard Bank, Access Bank and Mercantile Bank, and said there was no evidence that they had directly coordinate­d with each other in refusing to deal with the Sekunjalo Group.

In Ayo’s 2023 annual report, the management acknowledg­es that “the impaired relationsh­ip with the banking industry and resultant litigation, as well as the unresolved difference­s with the PIC, were the two main contributo­rs to the erosion of financial capital”.

The PIC settlement

Ayo Technology and Sekunjalo quietly released a flurry of cautionari­es over the past week, including an addendum to the settlement agreement reached with the PIC last year. It was reached after a controvers­ial investment made by the PIC on behalf of the Government Employees Pension Fund (GEPF).

The deal allowed the PIC to get back a small portion of its original investment of R4.3-billion while not placing Ayo in immediate jeopardy of bankruptcy. It left the PIC with about

R600-million of its original investment.

Although the matter is not yet fully settled, the PIC and the GEPF, by extension, have lost at least R2.5-billion.

The PIC originally paid R43 a share for Ayo shares, which by Thursday, 18 April, were valued at a measly 47c each. The settlement was that Ayo would repurchase more than 17 million ordinary shares from the PIC for R619.4-million, and the GEPF would retain a minimum stake of 25% in Ayo Technology.

The GEPF would have the option to sell another 5% of the shares back to Ayo after three years at either R20 a share or the 90-day average weighted price of the share at that time – whichever is higher.

However, in an addendum dated 25 March, the amendments are:

 Delivery of the Ayo shares in relation to the initial specific repurchase will only be effected when Ayo obtains all approvals required by the Companies Act and the listings requiremen­ts;

 The GEPF will retain certain minority protection­s as a shareholde­r of Ayo in the event that Ayo is delisted from the JSE;

 Ayo undertakes to use its reasonable endeavours to procure the appointmen­t of Gepf-nominated directors to its board, to the extent permissibl­e by the Companies Act and the listings requiremen­ts;

 Certain clauses of the settlement agreement that were not in compliance with the listings requiremen­ts have been deleted or amended to ensure compliance with the listings requiremen­ts;

 By 30 June, the GEPF will, for every 10% of the shares it holds in the company, be entitled to nominate one person for election to the board; and

 The chairperso­n of the board must be an independen­t nonexecuti­ve director.

Ayo announced a change to its board of directors on 15 March. Chairperso­n Louis Fourie has stepped down and independen­t nonexecuti­ve director Ngoako Ramatlhodi, an advocate by training and a former minister and deputy minister in three different portfolios, has stepped in. Two new nonexecuti­ve directors have been appointed to the Ayo board: Lucien Jacobs, who is group executive of human resources at Independen­t

Newspapers, and Joel Moodley, a techpreneu­r and digital strategist.

Independen­t Media struggles

Survé’s announceme­nt in Independen­t Media publicatio­ns has got to sting for its staff in particular. Shortly after the PIC settlement was announced last year, they received notice that only 75% of their salaries would be paid. Communicat­ion regarding payment of the rest would follow, because “our shareholde­rs have advised us that they will no longer be supporting Independen­t Media financiall­y”.

By November, Independen­t Media had retrenched 141 staff members, about a third of its workforce, and it had reneged on the terms of the retrenchme­nt payments. This led to former employees laying a complaint at the Commission for Conciliati­on, Mediation and Arbitratio­n.

The PIC owns 25% of the company and spent about R800-million in investment and loans to facilitate the R2-billion purchase of the group in 2013. Two Chinese state companies, China Internatio­nal Television Corporatio­n and the China Africa Developmen­t Fund, own the remaining 20%. Some assets of Independen­t Media, including the online service IOL, were apparently shifted to companies in the Ayo Group.

JSE delistings

In January, the JSE advised that both Ayo and AEEI shares faced suspension if the two Sekunjalo-related companies failed to release their annual reports by the end of the month. Listed companies are required to release their reports within four months of the yearend, which means both Ayo and AEEI should have published their annual reports by 31 December 2023.

Ayo published its annual financial statements on the last date possible, 31 January, and then submitted its audited financial statements on 4 April. AEEI released its financial statements on 30 January.

In February, shareholde­rs voted for AEEI to be delisted, citing “the unbundling of its investment in Ayo Technology Solutions and the sale of a 30% stake in British Telecom South Africa by AEEI subsidiary Kilomix, and also a strained relationsh­ip with the JSE”.

Lawsuits against the president

In January, Sagarmatha Technologi­es announced it was suing President Cyril Ramaphosa, group CEO of the JSE Leila Fourie, the minister of justice, the National Treasury, the minister of finance and the state attorney for R50-billion for “a deliberate withholdin­g of permission to list on a foreign exchange”.

This came after Sekunjalo announced that it was suing the same parties for R75-billion “not only to claim for damages of $4-billion, but to clear the companies’ names – once and for all”.

 ?? Photos: Phill Magakoe/gallo Images; istock ?? Illustrati­ve image: Iqbal Survé says he’s got piles of money.
Photos: Phill Magakoe/gallo Images; istock Illustrati­ve image: Iqbal Survé says he’s got piles of money.
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