South Africa - Pretoria - 16 July 2019 - Former PIC CEO Dan Matjila testifies at the PIC Commission of Inquiry. Picture: Oupa Mokoena/African News Agency (ANA)

JOHANNESBURG - A request for liquidity to be created, in order to fund a subscription for Ayo Technology Solutions (AYO), was neither unusual nor irregular.

This is according to former Public Investment Corporation (PIC) chief executive and investment officer, Dr Daniel Matjila, who continued giving his testimony in Pretoria on Thursday at the Commission of Inquiry into alleged impropriety at the PIC. 

Matjila was in his second day of explaining the PIC's dealings with AYO - an IT services management company.

"The PIC must liquidate assets for fund acquisitions. It has no other source of capital from which to fund these acquisitions," Matjila said.

He added that unlike companies who were currently facing scrutiny at the State Capture Commission in Parktown, the PIC does not keep plenty of cash in the safe to fund acquisitions.

The PIC has been heavily criticised for its R4.3 billion investment into AYO, which has been thought to be risky and has lost half of its value.

But, Matjila used his platform to dispel the notion that he had compelled fellow employees and colleagues to follow his instructions on matters involving AYO, saying the PIC had funded plenty of acquisitions in this manner. 

"For example, the PIC's acquisition of 13.9 % of shares of Vodacom worth R23 billion and its acquisition of 50% of the V&A Waterfront, were both financed through the sale of near-cash instruments. Practically speaking, its cash is in the form of liquid investments and some shares like Anglo, are just as liquid as short term money market instruments," said Matjila.

He also explained how the classification of AYO had gone about and the fact that it was based on a weighting system, which takes into account various scores on environmental, social and governance issues.

According to Matjila, the threshold classification of a company stands at 49. At the time he dealt with AYO, it scored a 44 causing, it to be a laggard.

"A laggard classification does not necessarily provide a good reason not to invest because the issues identified can be intervention, thereby unlocking the potential of an investment."

The Commission adjourned early in the hope of sorting out the documentation that needs to be presented to the Commissioners.

Matjila is expected to continue his testimony next week.