South African services company Ayo Technology Solutions is in a court battle over the billions it took from Africa’s largest fund manager, banks are trying to close its accounts, and it just reported a first-half net loss that widened 13% to R116 million.
Ayo’s response? To double its gross dividend to 60 cents a share. In its 57-page first-half statement, there is no reason for the 100% increase.
But Ayo’s biggest shareholder is African Equity Empowerment Investments, and that holder’s parent company is Sekunjalo Investment Holdings.
Sekunjalo, which is also Ayo’s third-biggest shareholder, was founded and is co-chaired by Iqbal Surve.
Thanks to Sekunjalo and AEEI’s holdings in Ayo, Surve and his companies stand to receive a healthy dividend from an ailing company, which is being sued by South Africa’s large Public Investment Corp. and Government Employees Pension Fund for R4.3 billion, plus interest. There are another four court cases over and above the PIC and GEPF’s claim, according to Ayo.
Surve is a South African businessman who is challenging moves by local banks to close his companies’ accounts. Sekunjalo’s website describes him as “a physician, entrepreneur and an ardent philanthropist” who also controls one of the country’s largest newspaper groups.
“The company has since been reconfigured into an investment holding company and will continue to trade as such through the portfolio of investments it holds should the PIC and GEPF be successful in their application,” Ayo said in its unaudited earnings statement.
In 2018, the PIC invested R4.3 billion in Ayo to back its initial public offering, valuing the technology company at R14.8 billion even though its assets were estimated at R292 million five years ago.
Ayo’s total market value is now R1 billion, with its share price having plunged 93% since it listed.
The stock took a battering in 2018 when President Cyril Ramaphosa ordered a probe into whether PIC officials, including its former Chief Executive Officer Dan Matjila, followed procedure when it backed Ayo’s IPO.
Matjila was ousted in 2018, and the probe found the PIC had regularly flouted procedures when making investments with government workers’ pension money.
“Despite the negative impact of Covid-19 and the current negative operating environment caused by the banking crises and the PIC’s litigation the board believes that Ayo’s investments are resilient and well positioned for growth in the future,” the company said in a statement on Wednesday.