- JSE-listed IT group AYO Technology's share price rocketed by 400% in early trade on Monday morning.
- The sharp increase caused the local bourse's regulation division to start a review of share trades.
- The IT group, part of businessman Iqbal Survé's Sekunjalo Group of companies, says the "wild swings" in its share price may have been a deliberate scheme to "bring AYO into disrepute".
The JSE's Market Regulation Division is reviewing trade in the shares of AYO Technology Solutions after the IT group's stock rocketed by 400% on Monday.
A spokesperson for AYO said the group had formally requested that the market regulator investigate the irregular share price movement "as a matter of priority," adding the trades may have been a deliberate effort to "bring AYO into disrepute".
AYO shares had ended trade on Friday unmoved at R6 a share. But they jumped to R30 a share shortly after trading opened on Monday morning, on a fairly low volume of just 400 shares traded.
In a statement to Fin24, the JSE said its regulation division was reviewing trades to "determine whether any further action is required by the JSE regarding the significant increase in the share price".
The local bourse said the full day’s trading in AYO shares should be completed "in the next day or so".
"On completion of our review we will determine whether we can disclose the outcome of our review."
The local bourse said that while its Market Regulation Division was approached by AYO with a request to investigate the sharp increase in AYO's share price, it had by that time "already initiated a review of the trading activity as a result of the significant price movement when the market opened".
AYO, in a statement, said it was not aware of any specific trades being made by significant shareholders that could "influence the sudden upswing in the share price".
"These wild swings on tiny volumes can only be assumed to be malicious or mischievous at best," it said in a statement on Monday afternoon. "AYO makes the point that the sharp upswing in the share price is potentially, deliberately being used to bring AYO into disrepute and to continue the unwarranted negative narrative in the mainstream media."
AYO forms part of businessman Iqbal Survé's Sekunjalo Group of companies. Sekunjalo Investment Holdings owns 62% of African Equity Empowerment Investments (AEEI), which owns 49% of AYO.
Last August the JSE fined AYO R6.5 million for errors in its 2018 interim results. It said at the time that these errors stemmed from the group's failure to "subject the 2018 interim accounts and underlying documents to a critical and thorough review". AYO accepted the findings.
South Africa's state asset manager, the Public Investment Corporation, controversially decided to underwrite AYO’s entire private share placement before its listing in late 2017 with a R4.3 billion cash injection, despite internal concerns that it was overvalued.
After its listing, the group's shared fell to a low of just 92 cents a share in early 2020, before regaining some ground to trade in a band of between R5 and R7 a share for much of last year.
The PIC's former CEO, Dan Matjila, testified at the judicial commission of inquiry into the PIC that the group's investment in AYO was sound, and the IT firm's valuation did not look odd to him.
The asset manager has lodged a court challenge to recoup its investment in AYO. The IT firm is is opposing the matter, and has denied that any of the PIC's funds are at risk.
* Update: This article has been updated to include additional responses from AYO and from the JSE.