PRETORIA – The Public Investment Corporation (PIC) indicated a resistance to the British Telecommunications (BT) transaction, the PIC Commission of Inquiry was told on Tuesday.
Sekunjalo chairperson Dr Iqbal Survé, when making his submission to the commission, said this was conveyed to the company by former AYO executive, Kevin Hardy.
Evidence submitted by several PIC executives, indicated that the AYO strategic alliance with BT South Africa, was key to its investment in the technology company.
Survé spoke about the toxic public media context that arose while the BT transaction was being negotiated and the knock-on effect. “What this meant is that BT became very concerned about the reputational harm that it would sustain if the transaction proceeded.”
He explained elements of the BT transaction, which are as follows:
- Kilomax Investments (Pty) Ltd (which is a subsidiary of AEEI) held a 30% stake in BT. I served on the board of BT SA (as its Chairperson) until on or about December 2018.
- The BT transaction entailed Ayo acquiring that 30% stake in BT from Kilomax (in effect AEEI).
- It had always been made clear to the PIC that Ayo’s interest in BT was two-fold, viz: (a) through an Alliance Agreement; and (b) through an acquisition stake of 30%.
- The conditions that the Alliance Agreement was subject to, were met and that agreement is presently in place whereas, the Acquisition Agreement was not concluded.
- The PIC was always apprised of the fact that the BT acquisition was subject to the fulfilment of certain conditions, which had not been fulfilled at the time of the PIC’s subscription or the listing.
- The conclusion of the BT acquisition was never imposed as a condition of the PIC’s share subscription. Indeed, even though the PIC (through one of its committees) purported to impose conditions after the subscription had occurred, the BT transaction was not one of them.
- The conclusion of the BT acquisition was ultimately dependent on the PIC consenting to the acquisition and BT being agreeable to the transaction and the terms thereof. The transaction did not materialize for two reasons, viz:
- The import and value of the BT transaction must not be exaggerated in that there was no magic to that transaction. While it would undoubtedly have carried with it benefits for Ayo, the fact that the acquisition did not occur would not result in the inevitable failure of the Ayo listing, a decline in the value of the PIC investment or the absence of any growth in the PIC investment. Simply put, even in the absence of the BT transaction, the value of the PIC stake in Ayo had considerable potential for growth. The fact that the PIC did not insist on the BT acquisition being a condition for its share subscription gives credence to this.
- It is correct that the share value in Ayo has declined significantly; this is not on account of the BT acquisition not having occurred but the panic response of the PIC and the attendant media hype.
- There was ongoing engagement between BT and Ayo from the period before the listing until August 2018 in respect of the intended acquisition. The acquisition ultimately did not occur.
“There has, however, been ongoing engagement between the parties and I remain of the view that there is still some potential for that transaction to take place,” said Survé.
Survé said the fact that the BT acquisition failed, was not on account of AYO’s conduct in any way or form.