How the PIC, Iqbal Survé took state pensioners for a ride

Iqbal Survé                Picture : Lerato Maduna
Iqbal Survé Picture : Lerato Maduna

Documents show how the PIC and the Government Employees’ Pension Fund lost out after R4.3 billion investment in Ayo Technology Solutions

The controversial R4.3 billion investment late last year in media mogul Iqbal Survé’s Ayo Technology Solutions by the Public Investment Corporation (PIC) was used,
in part, to immediately lend R400 million to another company in which Survé owns an 85% stake.

Survé, who indirectly owns 30% of Ayo, denies the existence of this loan.

But it is one of many governance breaches cited in a letter on August 7 signed by Ayo’s three executives complaining about the pervasive interference in their work by Survé’s flagship listed company African Equity Empowerment Investments (AEEI), in which the Survé family has a 60% stake.

This letter and other documents City Press obtained show how the PIC and, more importantly, the Government Employees’ Pension Fund, has been taken for a ride, potentially adding billions to the impairments already suffered by the fund this year. 

The Ayo transaction saw the PIC pay R4.3 billion for 29% of the company as it listed on the JSE last December.

Internal PIC documents show there were internal concerns that the PIC was paying too much. It turns out that Ayo’s own executives agreed.

The main transaction the PIC’s money was meant to finance was to buy 30% of British Telecom SA (BTSA) from Survé’s AEEI for R1 billion.

In their letter, the Ayo executives say this price was “inflated”.

The letter also indicates that this deal was off the table as early as August 1, while Ayo continued to pretend it was simply delayed.

On August 24, in response to questions from City Press at the time, Ayo said that “the deal is currently in progress”.

the Government Employees’ Pension Fund, has been taken for a ride, potentially adding billions to the impairments already suffered by the fund this year.

The chair of Ayo’s board tried to redact board minutes dealing with the executives’ complaints to the extent that the company secretary called them “fraudulent” and refused to sign them off, after which the original minutes were sent out.

The apparent waste of government pensioners’ money on Ayo is possibly compounded by a “downside protection agreement” the PIC signed with AEEI at least six months after the investment. City Press has seen a draft version of this agreement, which seemingly gives the PIC no real protection at all.

The agreement is meant to compensate the PIC for any further losses after Ayo’s share price fell from the suspiciously high R43 per share the PIC paid last December to R23 last week.

Two companies controlled by Survé have been buying tiny numbers of Ayo shares almost daily for four months at a price that is, coincidentally, almost the same as the price that avoids triggering this agreement and, according to the draft version, its R1 billion penalty.

Ayo’s chairperson, Wallace Mgoqi, denies most allegations, adding that the company “will not be held hostage through extortion by anybody, and the company will take the necessary action, including criminal charges and crimen injuria charges, against those who continue to peddle false and deliberately misleading information”.

“While it does not really matter what we say, as you will write what you will, we are extremely concerned that the proprietary information, which is wrong and defamatory and completely out of context, and in your possession, is confidential and, in our view, is being used to extort the company,” he said by email.

Internal documents and emails from Ayo and the PIC, which City Press obtained, show how Survé’s AEEI effectively ran Ayo and its PIC cash pile, despite relinquishing its majority shareholding when Ayo listed on the JSE and the PIC bought its 29% stake.

To placate the PIC in August, Ayo replaced half of its board with people not tied to the “Sekunjalo family”, as the PIC apparently referred to its original board according to minutes from a board meeting in August.


Pervasive interference in Ayo’s operations by AEEI is at the core of complaints listed by Ayo executives in their letter to Ayo’s then chairperson Salim Young.

The executives were CEO Kevin Hardy, chief investment officer Siphiwe Nodwele and chief financial officer Naahied Gamieldien. Hardy and Nodwele have resigned, and Gamieldien is acting CEO.

In their letter, the three claim that AEEI was interfering with their daily work, obstructing acquisitions and causing the “systematic destruction of crucial relationships” with partners, including BTSA and acquisition targets.

Iqbal Survé Picture : Lerato Maduna

They also claim that interference by AEEI, a 49% shareholder, was so pervasive it could “lead to a breach of the Companies Act and the JSE listing rules”.

AEEI’s alleged obstruction of acquisitions is puzzling because the whole point of listing Ayo and getting the PIC to inject cash was to rapidly make numerous acquisitions in the information and communications technology industry.

However, Ayo has announced only one significant “binding offer” for an acquisition, despite promising a vast “pipeline” of deals after receiving the PIC money. This involved buying 55% of Sizwe Africa IT Group for R165 million.

The acquisition announcement on JSE news service Sens said that one of Sizwe’s sellers, with an unknown shareholding, is Reverend Vukile Mehana, AEEI’s chair and a director of other companies in the Sekunjalo group – and the ANC’s chaplain-general.

The PIC investment in Ayo has benefited AEEI in various other ways.

City Press reported two weeks ago how Ayo paid out a R100 million dividend, mostly to AEEI, after all its profits for the year stemmed simply from interest earned on PIC cash sitting in the bank.

Read: Ayo banks R227 million in interest, after controversial PIC investment

In addition, AEEI earned a R57.7 million fee for organising the placement of shares with the PIC in the first place. In their letter, the Ayo executives also claim:

  • The make-or-break BTSA deal was at an “inflated valuation of R990 million” and AEEI had committed to calling it off on August 1. Weeks later, Ayo told City Press the deal was “not in trouble”.
  • AEEI “imposed” a R400 million “investment/loan” to Survé’s asset management company 3 Laws Capital. The executives’ letter called for this to be returned with interest by the end of August. They added that “various attempts to gain visibility on statements of the account have failed to date”.

Mgoqi, appointed during the board reshuffle on August 22, denied knowledge of the letter until City Press provided him with a copy.

“I have discussed the contents of the letter in depth with the former chairperson of the Ayo board, Mr Salim Young, and with Ms Gamieldien, now the acting CEO, who was a party to the letter. I am again satisfied that all matters have been resolved,” he told City Press afterwards.

Survé denied the existence of the R400 million loan.

“I have checked with the executives of 3 Laws Capital and there is no such loan,” said Survé by email.

Mgoqi initially also denied the existence of the loan before seeing the letter in which the executives complain about it. However, he suggested there would be nothing wrong with the loan in any case.

“Whatever decision [the Ayo board] makes with placing of funds to institutions and asset managers, it does so by following proper due process, governance, and with due regard to the rules and regulations of the institutions in which the company invests,” said Mgoqi.

“We therefore find it absurd that you are questioning the decisions of this board as to where and how it invests the company’s monies.”

Regarding the alleged overvaluation of the BTSA stake, Mgoqi said that “a JSE-approved and independent valuer” had determined the market value of the acquisition.

“We are not aware of any executive saying the price was inflated,” Mgoqi said, again before seeing the letter, in which executives say exactly that.

“For the record, Ayo could not have made that acquisition ... without the approval of the PIC, irrespective of what any executive thinks of the valuation,” added Mgoqi.

But this contradicts Ayo’s own prelisting statement to investors in December, where no mention is made of a valuer. In it, Ayo said the R1 billion price tag for 30% in BTSA was simply the “current book value in AEEI”.


In public, the PIC has steadfastly defended its investment in the black-owned technology company.

After a meeting on December 20, where the PIC approved the Ayo investment, it resolved it would be “subject to” AEEI providing a contract protecting the PIC against a fall in the share price.

The actual contract was only forthcoming at the end of June.

Public Investment Corporation

A draft version of the massively delayed “downside protection agreement” that the PIC signed with AEEI to protect it against a collapse of the Ayo share price, provides for a penalty payment of up to R1 billion if the Ayo share price fell below R26 for an extended period.

But it also reads that AEEI “at its sole discretion” can pay the penalty in Ayo shares, leading to the absurd situation where the PIC is compensated for its Ayo shares becoming worthless by receiving yet more Ayo shares.

The PIC has for two weeks ignored most of City Press’ questions, except to say it managed to sign a better final protection agreement that “provides sufficient downside protection to the PIC”, according to the organisation’s head of corporate affairs Deon Botha.

However, this protection was not mentioned as a potential contingent liability in AEEI’s financial results released two weeks ago.

AEEI is a listed company and would have to tell shareholders if there was a chance it would be called on to pay a R1 billion penalty.

Meanwhile, two Survé-controlled companies have bought tiny numbers of Ayo shares almost every day for roughly R25 each over the past four months.

JSE trading data shows that almost all other Ayo share bids are for as little as R1.70 per share.

Survé’s share purchases were made through Sekunjalo and 3 Laws Capital, which have been responsible for most trading of Ayo shares since the end of July.

Publicly available JSE data show there were about 250 000 Ayo shares traded between August 1 and November 30, of which Sekunjalo and 3 Laws Capital bought almost 152 000, or 60%.

Survé defended these purchases as a long-term strategy to acquire the shares at a good price due to Ayo’s excellent long-term prospects.

“Ayo, as a prominent black ICT company, has superb prospects. Its fundamentals are sound with strong profitability, governance and balance sheet. The decision of the portfolio investment committee to invest in Ayo is validated further by the company’s good results and prospects – we think there is a good pipeline ahead,” Survé said by email.


An email from Ayo company secretary Nobulungisa Mbaliseli to former chair Young severely objects to his amendments to the minutes of the board meeting where Ayo executives’ complaints were discussed.

Mbaliseli has since left Ayo and Young has been replaced by Mgoqi.

The email states Mbaliseli refused to distribute Young’s amended minutes because they were “no longer a true reflection of what was discussed” and “would be tantamount to further governance breaches in the organisation”.

“If I circulate the minutes ... [it would be] tantamount to me having prepared fraudulent minutes and this would result in me breaching my fiduciary duties,”
she states.

The full minutes were ultimately distributed.

The proposed changes that Mbaliseli had objected to included a redaction of any reference to Survé’s R400 million loan, as well as references to the executives’ complaint that the BTSA deal underpinning the entire PIC investment was “inflated”.

In response, Mgoqi said it was “totally false” and “without foundation” that Young tried to alter the minutes.


The makeup of the consortium has not been made public or even disclosed to the PIC, except to say it includes unions, black business organisations and the Social Entrepreneurship Foundation – a part of Survé Philanthropies.

In emails from July and August, the PIC’s general manager for listed equities, Lebogang Molebatsi, was frantically trying to get Ayo to clarify who was in the consortium. He was also asking Ayo why its BEE partners got shares at R1.50 when the PIC paid R43.

Shortly before listing on the JSE and selling shares to the PIC at R43 apiece, Ayo also brought on board a BEE consortium at R1.50 a share.

He urgently needed the information so he could present it to an imminent meeting of the PIC’s investment committee, the emails state.

Former Ayo CEO Hardy could not be reached for comment and former Ayo investment chief Nodwele referred questions to Ayo.

AEEI answered questions by saying: “We have no further comment to make on any of these matters.”

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