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Get it right … PIC’s investment in AYO carries value – Survé

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Sekunjalo chairperson Dr Iqbal Survé. Photo: Ayanda Ndamane/African News Agency (ANA)

CAPE TOWN – The chairperson of the Sekunjalo Group, Dr Iqbal Survé, on Sunday 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 very 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.

What led to the resignation?

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 that they should be 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 percent 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 and hence this attempt to try and shake down the company for a settlement. 

Survé said the AYO board is now confident that 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 has more cash on hand than what 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 last five years. 

“AYO does not have debt. AYO currently has cash reserves of 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 Sruvé.

Much ado about nothing

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 R1.5 billion of its R4.3 billion to banks and other asset management institutions in order optimise returns. These are done on an annual basis. All of the funds belong to AYO and are invested on behalf of AYO in either fixed-income new funds, money market funds or high yield 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 while 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,”

Survé described this as nothing but corporate terrorism at its best. 

“Ths 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 that 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, cloaked as pointing out governance issues.

BUSINESS REPORT ONLINE

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SA business advisory service flourishes

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Business advisory specialist, Ariston Global, reported financial year growth of 91 percent, recording more than 50 percent growth since the previous year.
Photo: Supplied

DURBAN – Business advisory specialist, Ariston Global, reported financial year growth of 91 percent, recording more than 50 percent growth since the previous year. 

This exponential growth according to Reginald Pillay, group managing director, finance and operations at Ariston Global, lies in the business advisory services offered and how these are packaged to clients of all sizes, including the small and medium sector. 

The group plans to expand its reach into Africa, and will also leverage growth opportunities within the UK.

“There is a clear gap in the market for an advisory role spanning across all business areas. Having improved our own organisational capability, Ariston deploys strategies that are tried and tested, aligned to the target market, and aimed at making good businesses great,” said Pillay.

The company currently offers services across accounting, tax, human resources, payroll, business optimisation, compliance, recruitment and strategy.

Targeting Africa, Ariston has offices in Botswana and is growing its representation in Zambia, Congo, Nigeria and Kenya. Pillay said that Africa holds much promise and Ariston has targeted the continent’s fastest developing countries: 

Pillay said, “Africa has all the resources, both naturally and intellectually, to become a leading provider of services and solutions across industry sectors. Ariston’s strategy is to provide truly entrepreneurial solutions to businesses at the forefront of this African focused development”. 

Leveraging business growth in other countries, Ariston is pursuing London as its foray into the global sector. With an office set up in this European hub, Pillay said that while it is an established market, strategic advice is almost exclusively targeted at large corporates.

“We have learnt through our network of operations that medium-sized businesses are in need of strategic advice as much as large corporates. Our experience across Africa and now in Europe, makes us an ideal advisory to all businesses. We have managed and dealt with volatility, uncertainty, chaos and ambiguity, making Ariston a perfectly placed advisory service to assist clients to grow their businesses,” concluded Pillay. 

BUSINESS REPORT ONLINE

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City of CT accused of dragging feet in CTICC probe

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Members of opposition parties say nothing has come of the latest investigation and believe the report will be swept under the carpet.


FILE: The Cape Town International Convention Center. Picture: South African Tourism.

CAPE TOWN – The City of Cape Town (CoCT) has been accused of dragging its feet on the completion of a forensic investigation into the expansion of the Cape Town International Convention Centre (CTICC) after several irregularities were detected in previous reports.

In December last year, an investigation was ordered by council following heated deliberations on the matter.

The expansion of the CTICC was at one stage the subject of an investigation by the Public Protector.

A forensic investigation was also initiated by former city manager Achmat Ebrahim, but nothing came of it.

African Christian Democratic Party councillor Grant Haskin now claims nothing has come of the latest investigation.

“It seems to me like there’s no sense of urgency by the city administration in implementing that council decision. The process can’t be ignored because it doesn’t suit some people.”

African National Congress councillor Xolani Sotashe believes the report will be swept under the carpet: “They have been trying hard to hide information in the past, so we have no reason not to believe that. We can count a number of issues that they have tried to sweep under the carpet.”

The city’s spokesperson Luthando Tyhalibongo said the investigation is still underway.

(Edited by Mihlali Ntsabo)

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Moody’s: Mboweni’s Budget shows further erosion in SA’s fiscal strength

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Tito Mboweni, South African Minister of Finance wa

Tito Mboweni, South African Minister of Finance walks with members of the Finance Ministry up Government Avenue to deliver his medium-term budget speech on October 24, 2018. (RODGER BOSCH/AFP/Getty Images) ~ AFP

Moody’s, the only major ratings agency that has not already downgraded SA’s sovereign debt to junk, on Wednesday responded to Finance Minister Tito Mboweni’s maiden Budget by saying it “highlights the government’s limited fiscal flexibility amid a challenging economic environment”.

Moody’s currently has SA’s debt at Baa3 with a stable outlook, one notch above junk status. Rival agencies Fitch and S&P downgraded SA’s sovereign debt to non-investment grade in 2017.

Were Moody’s to downgrade SA to sub-investment grade, the country would automatically be ejected from the major Citi World Government Bond Index. This would force asset managers to sell billions of rands’ worth of SA bonds. Moody’s is scheduled to issue updated ratings in March.  

In a statement on Wednesday afternoon, Lucie Villa, a Moody’s senior credit officer and lead sovereign analyst for South Africa, said the Budget showed a further erosion in fiscal strength after the October mini budget already pointed to wider deficits. 

“Government support for Eskom, which will be only partially compensated by a reduction in other spending, and revenue under-performance lead to a renewed upward revision in fiscal deficits and debt levels, while contingent liability risks persist,” she said. 

Villa’s statement does not constitute a ratings action. 

In his maiden Budget, Mboweni announced that Treasury would allocate R69bn in financial support over the next three years to help cash-strapped power utility Eskom pay its debts, as it undergoes a restructuring to make it profitable.

Speaking to journalists at a pre-Budget briefing, Mboweni said the state was basically placing Eskom “under curatorship”, and warned the R23bn a year lifeline came with conditions attached.

Part of the support package includes the installment of a “chief reorganisation officer” at Eskom who will be jointly appointed by Mboweni and Public Enterprises Minister Pravin Gordhan.

Earlier Investec Chief Economist Annabel Bishop said the Budget could possibly stave off a credit negative response from Moody’s. 

“Government expenditure is projected to rise only in one year to provide financial support to Eskom. This may be seen as credit negative by Moody’s, but as it is only one year it may be enough to stave off an actual credit rating downgrade or even change to the outlook for the year,” she said.

A negative outlook can indicate a ratings downgrade within 18 months, she said. 

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