Self-proclaimed philanthropist Dr Iqbal Survé announced last week in an article published by Independent Media (of which he is chairperson) that he has repurchased assets valued at more than R5-billion in industrial consortium Ayo.

Not only that, he went on to say that these investments “now become part of the Survé private empire with tens of billions of rand worth of investment assets (more than 200 companies) and a cash pile of several billion rand in South Africa”. The article further noted that the Survé family office in Switzerland manages a fund of several billion dollars in partnership with two Middle Eastern royal families.

The news is surprising given the quagmire of financial issues and controversy surrounding the entities linked to Survé. First, the banks have refused to deal with several of his companies. Then there are the controversial Public Investment Corporation (PIC) settlement and the delisting of African Equity Empowerment Investments (AEEI). And don’t forget the lawsuits that two of Survé’s companies instituted against the government and Cyril Ramaphosa.

Shut out by the banking industry

When it comes to money, the first red flag is that the banking industry (FNB, Nedbank, Mercantile Bank and Standard Bank) started closing their doors last year to Sekunjalo and related entities, including Independent Newspapers, owing to reputational risk.

In July, the Competition Appeal Court handed down a judgment in favour of Standard Bank, Access Bank and Mercantile Bank, and said there was no evidence that they had directly coordinated with each other in refusing to deal with the Sekunjalo Group.

In Ayo’s 2023 annual report, the management acknowledges that “the impaired relationship with the banking industry and resultant litigation, as well as the unresolved differences with the PIC, were the two main contributors to the erosion of financial capital”.

The PIC settlement

Ayo Technology and Sekunjalo quietly released a flurry of cautionaries over the past week, including an addendum to the settlement agreement reached with the PIC last year. It was reached after a controversial investment made by the PIC on behalf of the Government Employees Pension Fund (GEPF).

The deal allowed the PIC to get back a small portion of its original investment of R4.3-billion while not placing Ayo in immediate jeopardy of bankruptcy. It left the PIC with about R600-million of its original investment.

Although the matter is not yet fully settled, the PIC and the GEPF, by extension, have lost at least R2.5-billion.

The PIC originally paid R43 a share for Ayo shares, which by Thursday, 18 April, were valued at a measly 47c each. The settlement was that Ayo would repurchase more than 17 million ordinary shares from the PIC for R619.4-million, and the GEPF would retain a minimum stake of 25% in Ayo Technology.

The GEPF would have the option to sell another 5% of the shares back to Ayo after three years at either R20 a share or the 90-day average weighted price of the share at that time – which­ever is higher.

However, in an addendum dated 25 March 2023, the amendments are:

• Delivery of the Ayo shares in relation to the initial specific repurchase will only be effected when Ayo obtains all approvals required by the Companies Act and the listings requirements;
• The GEPF will retain certain minority protections as a shareholder of Ayo in the event that Ayo is delisted from the JSE;
• Ayo undertakes to use its reasonable endeavours to procure the appointment of GEPF-nominated directors to its board, to the extent permissible by the Companies Act and the listings requirements;
• Certain clauses of the settlement agreement that were not in compliance with the listings requirements have been deleted or amended to ensure compliance with the listings requirements;
• By 30 June, the GEPF will, for every 10% of the shares it holds in the company, be entitled to nominate one person for election to the board; and
• The chairperson of the board must be an independent non-executive director.

Ayo announced a change to its board of directors on 15 March. Chairperson Louis Fourie has stepped down and independent non-executive director Ngoako Ramatlhodi, an advocate by training and a former minister and deputy minister in three different portfolios, has stepped in. Two new non-executive directors have been appointed to the Ayo board: Lucien Jacobs, who is group executive of human resources at Independent Newspapers, and Joel Moodley, a techpreneur and digital strategist.

Independent Media struggles

Survé’s announcement in Independent Media publications has got to sting, for its staff in particular. Shortly after the PIC settlement was announced last year, they received notice that only 75% of their salaries would be paid. Communication regarding payment of the rest would follow, because “our shareholders have advised us that they will no longer be supporting Independent Media financially”.

By November, Independent Media had retrenched 141 staff members, about a third of its workforce, and it had reneged on the terms of the retrenchment payments. This led to former employees laying a complaint at the Commission for Conciliation, Mediation and Arbitration.

The PIC owns 25% of the company and spent about R800-million in investment and loans to facilitate the R2-billion purchase of the group in 2013. Two Chinese state companies, China International Television Corporation and the China Africa Development Fund, own the remaining 20%.

Some assets of Independent Media, including the online service IOL, were apparently shifted to companies in the Ayo Group.

JSE delistings

In January, the JSE advised that both Ayo and AEEI shares faced suspension if the two Sekunjalo-related companies failed to release their annual reports by the end of the month. Listed companies are required to release their reports within four months of the year-end, which means both Ayo and AEEI should have published their annual reports by 31 December 2023. 

Ayo published its annual financial statements on the last date possible, 31 January, and then submitted its audited financial statements on 4 April. AEEI released its financial statements on 30 January.

In February, shareholders voted for AEEI to be de­­listed, citing “the unbundling of its investment in Ayo Technology Solutions and the sale of a 30% stake in British Telecom South Africa by AEEI subsidiary Kilomix, and also a strained relationship with the JSE”.

Lawsuits against the president

In January, Sagarmatha Technologies announced it was suing President Cyril Ramaphosa,  JSE group CEO Leila Fourie, the minister of justice, the National Treasury, the minister of finance and the state attorney for R50-billion for “a deliberate withholding of permission to list on a foreign exchange”.

This came after Sekunjalo an­nounced that it was suing the same parties for R75-billion “not only to claim for damages of $4-billion, but to clear the companies’ names – once and for all”. DM

This article first appeared in our weekly Daily Maverick newspaper, DM168, which is available countrywide for R35.