Picture: Armand Hough / African News Agency (ANA)
By Feroza Petersen
The mainstream media’s relentless misrepresentation of AYO Technology Solutions (AYO) and its transaction with the Public Investment Commission (PIC) is deeply troubling. Despite a settlement reached between AYO and the PIC that benefits both parties and their investors, the media continues to propagate disinformation to undermine the agreement’s terms.
Central to this disinformation campaign are baseless allegations that AYO lied about and overstated its share price when it sold approximately 30% of its stake to the PIC. The media cites the share price drop following their sabotage campaign against AYO as “proof” of this claim, ignoring that the decline was a direct result of the negative media barrage.
The media’s determination to undermine the transaction stems from a fierce rivalry and vendetta against their competitor media owner, Dr Iqbal Survé. The media even stopped the Sagarmatha stock exchange listing, a company in which Survé is an indirect shareholder.
AYO was targeted through a series of damaging articles, leading to a slump in its share price.
The Mpati Commission was established primarily due to this wave of negative coverage.
Once the share price declined, the media changed tactics, falsely claiming that the drop was due to AYO’s misrepresentation during share sale negotiations with the PIC. This claim is far from the truth. In fact, PIC experts and testimonies during the Mpati Commission and at court contradict the media’s narrative.
In Western Cape High Court this year, PIC general manager of listed equities, Lebogang Molebatsi, said that the PIC had “a team of sector specialists who we interrogated, discussed and debated with while looking at a strategy.” An April 2018 report also concluded that “AYO was an attractive, catalytic investment”.
Former PIC assistant portfolio manager, Victor Seanie is the one who pursued the claim that the PIC AYO deal was not above board. Seanie was fired by the PIC for dishonesty, a lack of integrity and breaching his employment contract.
Testifying at the Mpati Commission, portfolio manager Sunil Varghese said that the PIC did not overpay for AYO. The initial valuation process of AYO led to a “base case value of R43 per share”. Varghese was Seanie’s manager.
How the mainstream media ran with a singular narrative led by an individual fired for ‘dishonesty and lack of integrity’ remains a mystery. Their decision to focus on a singular narrative, ignoring contrasting evidence from reputable sources, reveals their motive.
The fall of the share price, engineered by the media, cannot be used to claim AYO did wrong. If not for the negative media campaign, AYO’s share price would not have suffered the decline it faced. The media’s narrative was meant to justify their attacks on the company.
On February 26, 2018, just two months after listing, AYO’s share price experienced a 39% drop, recovering immediately on the following day. The media seized this one-day fluctuation as “evidence” of an “unrealistic valuation.” However, the fact remains that AYO’s shares maintained an average closing price of R40 per share during that period—a mere R3 difference from the listing price two months prior.
The AYO pre-listing process involved large, reputable transaction advisory firms, legal firms, accounting firms, auditors, and the Johannesburg Stock Exchange listings division. It is implausible that all these parties would collude with AYO in “misleading the PIC,” risking their reputation in the process. AYO has been subjected to intense scrutiny and has never been found guilty of any wrongdoing.
When going into the PIC transaction, AYO had come out with buoyant financial results and a material deal to manage Sasol’s global IT requirements, including acquiring a 30% stake in British Telecoms South Africa (BTSA).
Following the initial media uproar, the PIC launched an internal investigation into the AYO transaction, which ultimately concluded in its favour. At the time, PIC investor relations specialist Sekgoela Sekgoela told Moneyweb, “The investment committee wanted to see if all the investment processes and procedures were followed. The investment committee is satisfied with the outcomes.” Thus, the transaction was sound and above board.
From the first month of listing, AYO faced relentless media attacks and scrutiny of its financial performance and achievements—an unreasonable and unprecedented expectation. The mainstream media’s hypocrisy knows no bounds, and it is crucial to remain mindful of this fact. While media favourites like Steinhoff, Tongaat-Hulett, and EOH receive free passes, those deemed adversaries like AYO are subjected to constant slander.
The recently concluded PIC-AYO court settlement marked the end of a tumultuous period for both parties. This agreement, reached after careful consideration, demonstrates the companies’ determination to move forward. The settlement’s terms reflect the best interests of all parties involved, ensuring that AYO can refocus on its operations and bring value to its shareholders. Yet, the mainstream media refuses to accept this outcome, opting instead to perpetuate unfounded accusations and biased narratives.
The attempts to destroy companies committed to transforming the IT industry in dire need of transformation must be resisted and rejected.
* The views expressed do not necessarily reflect the views of IOL or Independent Media.