Former Ayo CIO says South African company is partly illegitimate

Jamie McKane

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Former Ayo CIO says South African company is partly illegitimate

Ayo Technology Solutions Ltd. is at least partly an illegitimate business and has fabricated financial statements even while securing a 4.3 billion-rand ($304 million) investment by Africa’s biggest money manager, according to Ayo’s former chief investment officer.

A decision by the Public Investment Corp., which manages South African government-worker pension funds, to buy shares in Ayo is at the heart of an ongoing inquiry into how the state-owned company makes financial decisions.

[Bloomberg]
 

Ninja'd

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It is or it isn't illegitimate, no partly. It's like saying someone is partly a virgin.
 

Gordon_R

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https://www.fin24.com/Companies/Financial-Services/ayo-valuation-a-thumbsuck-former-exec-concedes-as-pic-inquiry-resumes-20190514

The valuation of controversial ICT company AYO Technology Solutions was "stretched out" so that it appeared to be worth more than it was in reality, according to the testimony of the company's former chief investment officer.

Abdul Malick Salie on Tuesday appeared before the commission of inquiry into the Public Investment Corporation (PIC), after he was subpoenaed to present evidence.
In his testimony, Salie unpacked how AYO, which listed on the JSE in late 2017, was ultimately valued. The PIC invested R4.3bn in the ICT company when it listed, buying 29% of its shares and valuing the group at R14.8bn. The share price has since declined from its listing price of R43 a share to R10.99 a share.

The inquiry already heard from Salie's predecessor, Siphiwe Nodwele, in April that he believed AYO's initial valuation was overstated. Nodwele, who resigned in August 2018, told the commission he valued the ICT group at between R700 million and R1 billion, about 5% of the PIC's valuation.
 

Gordon_R

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Lengthy investigation by amaBhungane into close family share dealings (price manipulation) within AYO and related companies. Surve has a lot of explaining to do, to both the PIC inquiry, and the Financial Sector Conduct Authority (FSCA): https://www.fin24.com/Economy/iqbal-and-friends-20190705-3
Iqbal Survé’s businesses seem uncomfortably incestuous, given that the Financial Sector Conduct Authority (FSCA) is investigating possible share manipulation at all three of his listed companies.
After holding steady at just above R22 for three months, the share price suddenly collapsed, spiralling to the current level of R9. It just so happens that January 19 was the day a downside protection agreement with the Public Investment Corporation ended. This agreement lasted three months from October 19, and would have penalised AYO if its share price fell below R22.
Allegations of manipulation and collusion also emerge from the summons delivered by the PIC in an attempt to get its money back – or, more precisely, the sum of R4 290 654 165.00 plus interest at the rate of 10.25% per annum from 22 December 2017.

According to the PIC case, AYO misrepresented key parts of its investment case
 
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ToxicBunny

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I would think in short order Ickypoo's little empire is going to come crashing down around him, and that lovely R10m+ penthouse he uses in the CBD will be a dream for him.
 
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Gordon_R

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I would think in short order Ickypoo's little empire is going to come crashing down around him, and that love R10m+ penthouse he uses in the CBD will be a dream for him.
We might like to think so, but Jooste and Steinhoff shows that it takes years to actually lock up these scammers. The bigger the deception, the longer it takes to investigate and prosecute.
 

ToxicBunny

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We might like to think so, but Jooste and Steinhoff shows that it takes years to actually lock up these scammers. The bigger the deception, the longer it takes to investigate and prosecute.
short order being 2 or 3 years I would think.... But the FSCA might make certain things happen faster.

I'm definitely not thinking weeks or months.
 

Gordon_R

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More on the PIC and over-valuation of the AYO listing: https://www.dailymaverick.co.za/article/2019-07-25-dan-matjila-says-he-was-satisfied-ayo-technologys-r43-a-share-valuation-was-reasonable-experts-strongly-disagree/
Testifying on Thursday 25 July 2019 at an inquiry into allegations of corruption at the PIC, former CEO Dan Matjila revealed that the asset manager could have subscribed for shares at less than R43 a share.

In AYO’s draft pre-listing statement, the company’s shares were stated to be issued at a price of between R28 a share and R43 a share. A pre-listing statement details the number of shares a company plans to sell to investors and their value. It also explains the company’s financial performance that investors can use to determine the value of shares.

Even if AYO shares were at the lower end of the valuation range (R28 a share) it was considered as astronomically high by two asset managers who told Business Maverick that the real value of the shares was 16 cents a share. This was after considering AYO’s net asset value of just a few cents per share.
Several witnesses have blamed Matjila for the PIC’s sloppy investment in AYO. One is the PIC’s suspended assistant portfolio manager, Victor Seanie, who testified at the inquiry that Matjila was a close friend of Survé, which influenced the state-owned asset manager’s decision to invest in AYO. Matjila has denied this.

Seanie said no substantive due diligence was done by the PIC on the deal and it was rushed to benefit AYO, which approached the state-owned asset manager with a “fixed” R43-a-share valuation that was not negotiable.

About the rushed nature of the deal, Seanie said that in three initial public offerings he worked on, the initial process from receiving a pre-listing statement to the subscription of shares was 11 weeks. AYO was finalised in three weeks.

Matjila believes that the PIC followed proper processes in its investment in AYO. He said the PIC paid R43 a share for a 29% stake in AYO, thus valuing the company at “R14.8-billion” even though its assets were estimated at “R292-million” (the net asset value).
 
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evilstebunny

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This is like Estina where authorization was granted in a day, no government department is ever that efficient, unless something was pushed through to benefit the cadres of course.

They should check the deeds office in Dubai..
 
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