#PICInquiry: Court halts CIPC move to withdraw PIC’s R4.3bn investment in AYO
The successful interdict rendered AYO’s application on the same notice moot, as Judge Cornelius van der Westhuizen ruled it was unlawful and should be set aside.
AYO chief executive Howard Plaatjies said: “The company re-asserts that the investment the PIC made into the holding group during the listing remains sound, and the company continues to deliver on its mandate.”
AYO had filed an urgent application in the North Gauteng High Court last week to interdict the CIPC from enforcing the compliance notice issued to the PIC in February for the recovery of R4.3 billion invested in the black-owned technology company.
Gilbert Marcus SC, who represented the PIC, argued that there were a number of red flags in the CIPC’s application, stating that the grounds provided by the CIPC to issue the compliance notice were based on factual errors.
Nazeer Cassim SC, representing AYO Technology Solutions, said the granting of the compliance notice would also have disastrous consequences for the economy.
“The interests should be to preserve the assets of the PIC into AYO. The decision of the CIPC to issue the compliance notice was a reckless decision,” Cassim said.
The PIC welcomed the court’s decision but said it would continue to carry out, to conclusion, the steps that it had already taken to recover the invested funds.
“The only issue in dispute was whether the issued compliance notice was defective and stood to be set aside or whether it ought to be suspended pending a review of that notice in the normal course.
“In that regard, the court made an important finding that the CIPC failed to afford the PIC a constitutional right to be heard prior to issuing the notice. This rendered the notice invalid and null and void,” said Deon Botha, the PIC’s head of corporate affairs.
The PIC invested in AYO in 2017 for a 29 percent stake.
The PIC’s portfolio manager of non-consumer industrials and listed equities, Sunil Varghese, said AYO’s actual value was as high as R47 a share at the time of the company’s initial public offering, according to the enterprise value-to-earnings before interest, tax, depreciation and amortisation (EV/Ebitda) valuation.
Varghese, in a submission to the PIC Commission of Inquiry, said EV/Ebitda was a popular valuation used in the finance industry to measure the value of a company and was the most widely used. It is used in conjunction with or as an alternative to, the price-to-earnings (P/E) ratio to determine the fair market value.
Varghese said the P/E gave a base case value of R43 a share, which was derived from earnings a share of R2.68 a share multiplied by 16 x P/E.
AYO declined 6.25percent on the JSE yesterday to close at R15.