- The controversial businessman is self-discipline to extract millions more from the R4.3-billion that Ayo Expertise Alternatives purchased from the PIC while the PIC battles to get the cash support.
- A transaction between linked parties would transfer Ayo cash to Survé’s family funding company.
- The deal was launched in June but was briefly blocked by a JSE rule on linked event transactions requiring a vote of non-conflicted shareholders.
Ever for the explanation that Public Investment Corporation (PIC) made its disastrous and extremely irregular R4.3 billion funding in Iqbal Survé’s Ayo Expertise Alternatives in December 2017, that cash has been gradually pumped out into the broader community of Survé companies and associates.
Customarily the closing beneficiary is Survé’s family defending company, Sekunjalo Investment Holdings, which owns 62% of his fundamental listed entity, African Fairness Empowerment Investments (AEEI). AEEI in flip owns 49% of Ayo but effectively controls it.
PIC cash has funded acquisitions from linked parties, loans for linked parties and costs paid to linked parties tied to Sekunjalo or AEEI.
That is on high of generous dividends paid largely to the benefit of AEEI, the utilization of the PIC cash even while Ayo’s precise operations lose cash.
This has continued even after the PIC went to court in Would possibly perchance perchance also 2019 to utilize a own a study to reverse the funding.
A brand recent deal within the pipeline will perceive this pattern of self-dealing utilize an extremely flagrant flip the keep Survé effectively buys something from himself with Ayo cash.
The trick entails an organization called SGT Alternatives which is 60%-owned by AEEI and 40% by Ayo – but which Ayo legally controls thanks to a shareholder agreement.
AEEI’s majority shareholding on this company was itself apparently funded by Ayo final three hundred and sixty five days in an extremely convoluted transaction the keep Ayo paid an initial R60 million and then one more contingent sum of R33.5 million but AEEI ended up owning a number of the corporate.
The latest deal sees SGT paying R48 million for shares in something called Bowwood Mainstreet 180.
The pronounce is that Bowwood is itself already 60% owned by AEEI. Which advance an organization 60%-owned by AEEI (SGT) is purchasing shares in one more company 60%-owned by AEEI (Bowwood).
More importantly, SGT is 40%-owned (and funded with inter-community loans of no lower than R33 million) by Ayo while Bowwood is 40%-owned by Sekunjalo, Survé’s family defending company.
The web dwell of this transaction is that R48 million cash equipped by Ayo leaves SGT to the benefit of AEEI (R28,8-million) and Survé (R19,2-million).
While AEEI and Sekunjalo’s respective affirm shareholdings in Bowwood get diluted, the recent shareholder SGT is controlled by AEEI and by extention Sekunjalo as wisely in say that no precise replace on high of issues takes space.
While you occur to hunt down at Survé’s Sekunjalo community of companies as an whole, you actual perceive cash appealing from Ayo towards the exit.
In its normal announcement of the transaction on the JSE’s news provider on 1 June, AEEI made no bones in regards to the transaction easiest serving one purpose – to let it “realise cash and utilise the proceeds from the Transaction to within the reduction of its [AEEI’s] recent exterior debt phases”.
The transaction is nonetheless furthermore a continuation of a favor of other Ayo-linked deals. Bowwood is correct a shelf company housing 25% of SAAB Grintek Defence.
AEEI has already vulnerable Ayo cash to amass a subsidiary of SAAB, Worldwide Present and Alter Technologies.
As with SGT this deal noticed Ayo cough up the acquisition impress but AEEI conclude up with 74% of the shares.
Ayo has subsequently, in line with interim monetary results published in Would possibly perchance perchance also this three hundred and sixty five days, given Worldwide Present loans of over R100-million.
There might presumably well nonetheless be a hiccup with the recent SGT deal.
It seems someone at AEEI had misunderstood the JSE’s principles spherical tangled linked-event deals esteem this one. Either that or they realizing the bourse would now now not assign a matter to.
In the actual June announcement talked about above, AEEI suggested shareholders the transaction was now now not enviornment to the approval of AEEI shareholders.
On 11 August AEEI published an update: “Shareholders are … suggested that the Transaction has subsequently being classified as a … linked event transaction requiring approval from Shareholders before the implementation.”
AEEI talked about it was getting willing a spherical for shareholders and might presumably well be partaking with the JSE in appreciate of the timing of its scenario.
If AEEI powers forward and puts the transaction to a vote, the linked event within the deal, Sekunjalo, will now now not be in a space to vote.
That takes Survé’s 62% out of the equation, leaving a physique of shareholders owning 38%.
It stays to be seen if this most up-to-date Ayo exploit succeeds.
Court docket case
The PIC has a pending utility within the Western Cape excessive court to claw support the cash it invested in Ayo.
According to a summons lodged on 29 Would possibly perchance perchance also final three hundred and sixty five days, the pronounce pension fund supervisor was persuaded to invest the R4.3 billion in Ayo in line with misrepresentations of its prospects. Ayo is defending the topic.
The PIC cited the court case when declining to pronounce for this chronicle.
“The Public Investment Corporation (PIC) has launched into a court route of, which seeks to recoup its funding in Ayo Expertise Alternatives (Ayo). Given that this route of is underway, the PIC reserves its feedback on Ayo’s affairs today,” it talked about by e mail in line with questions.
It is legendary that the PIC had furthermore regarded as making an urgent utility for an anti-dissipation recount to freeze Ayo’s resources, but felt it lacked the fundamental proof which was at the time largely confined to journalistic investigations esteem these of amaBhungane.
While the merely route of grinds on, Ayo continues to make utilize of the PIC cash for acquisitions that in most cases advantage linked parties besides the payment of dividends.
In step with Ayo’s monetary results for the six months to the conclude of February this three hundred and sixty five days, pastime earned on the PIC cash amounting to R108.76-million was quiet the source of with regards to all Ayo’s income.
The cash is nonetheless dwindling. By 29 February this three hundred and sixty five days easiest R3.3 billion of the initial R4.3 billion remained.
A dividend of 35 cents per part purchased declared nonetheless, depleting the coffers by one more R120.44 million.
The outcomes elaborate some more apparent liberties occupied with the PIC funds.
AmaBhungane beforehand reported how Ayo invested R75 million in an organization tied to Survé’s non-public assistant, Tricia Apollis. That funding was revalued by exterior auditors and impaired down to R5 million in Ayo’s subsequent accounts.
Nonetheless the latest results hiss the rupture in payment did now not conclude Ayo from investing one more R113-million within the Apollis company. This revelation is made in unaudited interim results making it that you perchance can mediate of that one more severe impairment might presumably well occur when auditors utilize a look.
In the same chronicle, amaBhungane reported proof that Ayo was being at threat of repay Survé’s non-public property investments, namely a self-discipline of pricey residences within the queer Silo construction in Cape Metropolis’s V&A Waterfront district.
This has evidently continued with Ayo paying R1.4 million “rental” to Prodirect Investments 112, the corporate that owns Survé’s residences.
Ayo and AEEI declined to answer to questions.
“Both companies own declined to give detailed responses because the info is contained within the SENS announcements and both stand by the fact that every one compliance has been dealt with by advance of the necessities for listed companies,” spokesperson Kaz Henderson talked about by e mail.
Survé did now not reply to questions.
The PIC’s normal funding in Ayo was enviornment to scathing criticism within the document of the Mpati commission of inquiry into allegations of impropriety at the PIC.
There was a litany of detrimental findings towards Survê and his companies, with the document declaring, “The Ayo transaction demonstrates the malfeasance of the Sekunjalo Team, the impropriety of the formulation and be conscious of the PIC besides the disagreeable negligence of both the CEO and CFO [of the PIC].”
- READ | The final observe bombshells within the PIC document, which is totally scathing of Dan Matjila
The document reserved its most severe suggestion towards any implicated company for Sekunjalo, calling for further forensic opinions, the recovery of the Ayo cash and merely steps relating to possible prison habits by Sekunjalo.
Survé’s was stumbled on to own engaged in “outright manipulation” of Ayo’s payment before the PIC invested besides faking market question for the shares.
The multi-billion-rand deal was rammed by by outmoded PIC chief govt Dan Matjila, with whom Survé was friendly, using roughshod over the formal processes intended to manipulate PIC investments.
Amongst the issues that fell by the wayside was a diagram back security agreement that the PIC wished to protect it from a fall down within the Ayo part impress. The funding is now with regards to worthless after Ayo’s part impress truly did fall down from R43 when the PIC invested to R5.75 currently.
The Monetary Sector Habits Authority is furthermore investigating a case of part impress manipulation towards AEEI, Ayo and sister company Premier Fishing.
*The amaBhungane Centre for Investigative Journalism, an self sustaining non-income, produced this chronicle. Like it? Be an amaB Supporter to wait on us conclude more. Register for our e-newsletter to get more.