South Africa - Pretoria - 02 April 2019 - Chairman of Sekunjalo Investment Group Dr Iqbal Surve (bottom right) at the Commission of Inquiry into the Public Investment Corporation(PIC), Sammy Marks Square. Picture: Karen Sandison/African News Agency(ANA)

PRETORIA – African Equity Empowerment Investments (AEEI) was willing to sell its R1 billion stake in British Telecommunications (BT) to AYO Technology Solutions, the Mpati Commission of Inquiry heard on Tuesday.

Sekunjalo Investment Holdings chairperson, Dr Iqbal Survé, told the Commission of Inquiry formed to look into alleged improprieties at the Public Investment Corporation (PIC), that AEEI had multinational investments where it’s been a long-standing empowerment partner, one of them being BT. 

“BT customers were coming under pressure to procure from more black empowered information and communication technology (ICT) businesses. As time passed, one of BT’s primary customers, Sasol, had been significantly impacted by the changes to the empowerment codes and requested its seven largest ICT providers to develop a structure that would assist them. 

“If BT could develop a structure with a true, black empowered ICT partner, not fronting, it could benefit from an extended seven-year contract being awarded at Sasol,” said Survé. 

He told the commission that the chief executive of BT and the AEEI board representatives, were advised that if BT could use a majority black-owned ICT business with black women ownership, strong track record, broad range of products and services and customer base, it would be a front runner, as these credentials were not easily sourced in the SA ICT landscape. 

“AEEI then presented AYO, then Technology Solutions Limited, to the BT team. This was strategically beneficial for all, as there were common shareholders. 

“Kevin Hardy the then BT chief executive, was positioned to move over to AYO, in order to drive the transitions of BT divisions to Ayo and activate the alliance agreement, the setup of which, would require capital. 

“It made sense to consolidate all ICT investments under a single company, and hence the decision for AEEI to sell its 30 percent investment in BT to Ayo. AEEI, however, had to do this for value, as BT had shown significant growth over time and was a fully paid-up investment. Furthermore, AYO would require capital to acquire the BT stake,” said Survé.

He said the listing would have two primary competitive advantages:
Empowered ownership and a global alliance with a multinational operating in 43 countries; and
the ability by a black empowered South African company to service large local corporates.

Survé said in or about August 2017, meetings took place between AEEI representatives and AYO representatives, and BT suppliers and subcontractors, who could benefit from this model becoming part of AYO’s then acquisition pipeline. This acquisition pipeline required acquisition capital.

“The listing would also provide further accelerated growth of AYO’s existing group companies, which in itself, had seen revenues double from the 2016 to 2017 period (pre-listing), driven by its empowerment advantage.

“In light of the capital requirements, and the need to transition and service SASOL, the AEEI board in consultation with the BT (SA) board embarked on driving an accelerated listing process to position itself to compete against the other suppliers,” said Survé