PIC investment committee gives its backing to AYO deal
THE PUBLIC Investment Corporation (PIC) investment committee has given its backing to the fund manager’s decision to invest in AYO Technology after the deal came under intense media scrutiny in the last six months.
The PIC, which manages funds on behalf of the Government Employees Pension Fund (GEPF), said last month that the investment committee would examine the deal after media reports consistently flagged it.
The investment committee has oversight and decision making on investment activities. The PIC’s head of corporate affairs, Deon Botha, said there was misconception created in the media that the PIC’s chief executive Dr Daniel Matjila had the sole power to make investment decisions.
“Just because of the media noise regarding the AYO deal, the board saw it fit to satisfy itself that the AYO deal was conducted following best practice. The investment committee has since confirmed that nothing untoward happened when we invested in Ayo,” Botha said.
The PIC participated in the private placement of AYO shares in December last year and took 28.9 percent interest in AYO for R4.29 billion. This constitutes 0.23 percent of total GEPF funds.
The PIC said its valuation of AYO was, among other reasons, because the IT industry consolidation was expected to increase the industry’s attractiveness and that there was significant scope for AYO to increase its market share by acquiring smaller companies.
Approved
The AYO deal was initially approved by the PIC’s portfolio management committee, which has powers to approve listed investments of up to R10bn and up to R500 million in unlisted investments. The investment committee is delegated to approve listed and unlisted investments above R10bn. Matjila said it was unfortunate that aspersions were cast on the AYO deal, despite it having gone through the fund manager’s processes.
“At the end, it is good that the investment committee has satisfied itself that due process was followed in the decision to invest in AYO. It’s unfortunate that a picture is painted that I have the power to wake up in the morning and solely make investment decisions,” Matjila said.
Matjila’s position has also come under intense scrutiny in the past year, with allegations that he had solicited funding for his alleged lover. The allegations, which the board cleared him of last year, have recently surfaced, with calls for the government to suspend him. A call that the National Treasury has refused.
According to a presentation by the PIC to legislators last week, AYO competitors do not meet new empowerment criteria and that its empowerment credential gave it a competitive advantage.
The fund manager noted that EOH has 47.71 percent black ownership against a threshold of 51 percent and 10.15 percent black women ownership against a threshold of 30 percent. Dimension Data has 25.63 percent black ownership and just 4.63 percent black women ownership, while Accenture has 30 percent black ownership and 9.81 percent black women ownership.
AYO post listing has 70.5 percent black ownership and 32 percent black female ownership. PwC earlier this year said the listing of AYO in December was the largest ever black empowerment listing of an information and technology group in SA.
AYO, a spin-off of African Empowerment Equity Investments, last month said that it had signed a multi-year information and communication technology services contract with Sasol.