Dr Iqbal Survé told the Mpati Commission of Inquiry there was nothing wrong with AYO and its operations.
This comes two weeks after the North Gauteng High Court set aside the Companies and Intellectual Properties Commission (CIPC) compliance order demanding that the Public Investment Corporation recoup its R4.3 billion investment in AYO.
The order was issued a month after a Business Day report in January claimed that AYO had inflated its share price during pre-listing and that the PIC’s share in the company had since lost value.
Survé said that contrary to media reports, AYO was profitable, its share price was performing and that the PIC money had been used for its intended purpose.
He said AYO’s parent company, African Equity Empowerment Investments (AEEI), was willing to sell its R1billion stake in British Telecommunications (BT) to AYO Technology Solutions as part of acquisitions envisaged by the pre-listing statement.
“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,” he said.
“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.”
Survé told the commission the chief executive of BT and AEEI board representatives were advised 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 South African 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.
“It made sense to consolidate all ICT investments under a single company, and hence the decision for AEEI to sell its 30% 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.”
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.”