AYO Technology finally reveals full details of PIC settlement

An AYO announcement on the JSE Stock Exchange News Service (Sens) refers shareholders to this Daily Maverick article: “Terms of the PIC/AYO deal revealed – it is a bloodbath for state pensioners” and confirms that AYO will repurchase more than 17 million ordinary shares from the PIC for R619.4-million while the Government Employees’ Pension Fund (GEPF) will retain a minimum stake of 25% in AYO Technology. 

The disclosure of what the PIC and AYO had initially maintained was a “confidential” deal has no doubt come after some pressure from the JSE that the settlement terms, which were made an order of court, should be publicly released.

The details of the deal, which at the time AYO maintained was “confidential”, confirm the information revealed in the Daily Maverick article more than a week ago.

The GEPF, which has more than 1.2 million active members in addition to about 450,000 pensioners and beneficiaries and assets of more than R1.6-trillion, has the option to sell another 5% of the AYO shares back to AYO after three years at either R20 a share or the 90-day average weighted price of the share at that time — whichever is higher.

While this may seem like a sweet deal looking at that share price offer, the reality is that the PIC paid R4.3-billion or R43 a share for AYO shares, which are currently trading at R4.65 a share. In January this year, the shares were trading at R2.40. Over the five years since April 2018, AYO’s share price has plummeted by 89%.

It invested R4.3-billion for a return of just more than R600-million and the promise of another R600-million-odd in another three years, as explained here.

The PIC says it sought to resolve the long-running litigation “in a manner that best protects the interests of … stakeholders, in the circumstances, and with a view to giving the business of AYO a chance to create growth and value into the future”.

A source at the GEPF confirmed that the pension fund was scheduled to meet with the PIC later this week to discuss the settlement. The GEPF has previously gone on record about the matter, saying that although its total unlisted investments portfolio comprises less than 5% of its total assets, it represents a significant amount of funds.

“These are funds that the GEPF invests into, [to] contribute to the real economy of the country and to drive transformation but still aiming to realise its main objective of maximising returns. When the actions of officials bring this intention into question, it undermines the objective to invest in the real economy of the country and may lead to a review that may deprive the economy of greatly needed investment,” the GEPF said. DM/BM