Matjila: Deviation from PIC processes for Ayo deal was justified

Survé-linked transaction is one of the most controversial to be interrogated at the commission of inquiry.
Dan Matjila maintains that the Ayo transaction followed a valid process. Image: Moneyweb

The former chief executive of the Public Investment Corporation (PIC) Dan Matjila has defended the PIC’s decision to not follow typical investment processes when making an investment of R4.3 billion into Ayo Technology Solutions.

Read: Ayo ex-CIO says company is partly illegitimate

Matjila, in testifying before the PIC commission on Wednesday, explained that this course of action was as a result of tight time constraints and having to meet quorum challenges. 

The Ayo transaction has been one of the most controversial deals the inquiry has been investigating. On the second day of the commission’s hearings, two senior employees were suspended after flouting governance and approval processes that related to the transaction.

Head of listed investments Fidelis Madavo received the news moments before he was supposed to take the witness stand before the inquiry.

‘Forced to rush’ the transaction

The commission would later hear from assistant portfolio manager Victor Seanie, who was also suspended, about how the PIC’s investment team was forced to rush the transaction through on Matjila’s insistence.

Seanie said that despite failing to complete due diligence, and without the requisite approval committee having had sight of the transaction, Matjila signed the irrevocable subscription form to purchase a 29% stake in Ayo at R43 per share. 

Speculation as to why the transaction was concluded so hastily has been linked to Matjila’s supposed friendship with Sekunjalo Group chair and indirect owner of Ayo Iqbal Survé and the need to secure PIC money before the ANC elected a new leader at its Nasrec 2017 conference.

“Deviations are common in any business environment when circumstances necessitate such,” Matjila told the commissioners. 

He said he was introduced to the opportunity to invest in Ayo by Survé in October 2018, then passed it on to Madavo to assess its investment potential. Ayo had planned to list on the Johannesburg Stock Exchange (JSE) on December 21, 2017, and would close its subscription period by December 15.

Previous testimony by members of the investment team tasked with compiling the Ayo transaction revealed that Ayo did not go through the first portfolio monitoring committee (PMC) meeting. This is where, if the committee agreed, it would have received the green light to undergo due diligence. It would then be referred to the second PMC meeting where the transaction would be approved.

No quorum, no meeting, no problem

Matjila told commissioners that PMC1 ad PMC2 were not different meetings but stages that a transaction was in. There were attempts to hold the PMC meetings scheduled for December 6 and 13 but they were postponed as the “relevant persons were either travelling or on leave and no quorum could be formed at those meetings”.

Chasing a tight deadline, Matjila said the PIC team decided to use Ayo’s draft pre-listing statement and began draft due diligence without going through PMC1. 

Citing the general manager of listed equities Lebogang Molebatsi and the JSE’s prior testimonies to the commission, Matjila highlighted that the JSE-approved document contained “sufficient and proper, credible and verified information”, which investors can use to make decisions on a company that is yet to be listed.

Ayo Technology Solutions

Matjila said deviating from the PMC1 stage was common during initial public offerings because these were accompanied by JSE- approved pre-listing statements, which had all the legal, financial and technical assessments and information that would have been verified by external professionals.

He said it was “commended” that due diligence was conducted without PMC1 approval because it would not have been able to receive the approval on time. 

Phone call appraisals

The Ayo deal team was not able to hold the meeting on December 13 either, again because the meeting did not quorate as the leader Madavo was travelling overseas.

Instead of waiting for the due diligence reports to be finalised, Matjila made phone calls to the acting head of risk Candace Abrahams, acting head of legal Winnie Setshedi and ESG (environmental, social and governance) head Matseko Taukobong to confirm if the work they had done at that stage recommended the conclusion of an investment in Ayo. 

Matjila said all the parties gave Ayo the green light, adding that between December 14 and 15 all due diligence processes and reports were completed and included in the appraisal report. 

Deal concluded without approval

Matjila signed the irrevocable subscription agreement on December 14 ahead of the PMC meeting that was meant to approve the transaction. 

He said he was approached by Molebatsi, who had started his acting role as head of listed investments in Madavo’s absence just a few days prior.

According to Matjila, Molebatsi approached him with the Ayo subscription form in hand and asked him what should happen as the deadline to subscribe to Ayo shares in the private placement was the next day. 

Read: Ayo investment passed on by Matjila – suspended PIC exec

While Molebatsi testified that Matjila had instructed him to sign the irrevocable subscription form, and assured him that there was nothing untoward as the decision would be ratified at the next PMC meeting, Matjila said the decision to sign the form was not his idea. 

Matjila said it was Molebatsi who proposed the idea, stating that he had tried to get the transaction approved through a round-robin resolution but that it was unsuccessful as the relevant people were on holiday. 

This then led to him saying that he would co-sign with Molebatsi as a key individual to show that he supported the decision and then request that the PMC “regularise” the transaction as soon as they met. 

Pressure to approve Ayo 

Both Seanie and Molebatsi previously testified that the team was under pressure to ensure that the Ayo deal was approved at the R43 per share price, despite their belief that it was overvalued. 

Uncertain of whether to adhere to Matjila’s instructions Molebatsi said he had called Madavo to get his opinion about signing the subscription form in his acting capacity and Madavo responded, saying that the CEO had a “higher power” and warned him to adhere to his instructions. 

“I did not want to be accused of insubordination against the CEO,” said Molebatsi. 

But Matjila denied placing pressure on anyone, saying the only pressure was to meet the listing deadline. 

“I have not put pressure on anyone to make specific recommendations, including the valuation to ensure the deal worked,” said Matjila.   

Today Ayo is trading at R9 per share and has been found to be ‘irregular’ by an internal PIC investigation. The state asset manager is undergoing a legal process to claw back its money, saying it was misled by the company.



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It just blows my mind that he can try and justify this VERY POOR investment. In fact it wasn’t an investment, just a donation to Iqbal Surve.

Lock him up!

Money laundering.?

Impossible! There was no money from Ikkie to launder!

And surprisingly their biggest client the state pension fund has never asked a question about any bad investments.

I will not be surprised if half of what they say they have is actually gone.

Have no fear. When the GEPF finally wakes up to how much their members have actually lost through PIC the taxpayer will be called upon to make good the loss.

…correct, it goes back to the SA taxpayer. Just make sure one’s status is “non-resident” by that time.

Let me think about that…. To write down R3bn out of the R4.2bn invested, no not justified.

You can only justify it if the original plan was to loot large amounts of money.

I suspect you are going to find that money in someones offshore bank account

Yes, offshore and out of the SA financial system where it could have been put to better work. But now the PIC is helping transform an over transformed international jurisdiction.

Next minute they will tell us this deal was about state security, that’s why they could not follow due process.

What is patently obvious from Matjila’s testimony is that he was either not in charge of the PIC or that he was an ill qualified pivotal point within the organization – I would say incompetent but that still needs to proven beyond a shadow of doubt – but he is doing a good job in this direction. Hope he has to return a large portion of his emoluments for failing to fulfill his job mandate

It is really amazing and mind blowing,to what extent unqualified,ill equipped buddies will go out to appease a friend.This is the most ridiculous financial investment decision,ever made without a proper due diligence,of an unlisted entity business made.It goes to show when we put a person in charge of public servant money ,this is what you get.The cheek to keep on justifying this ill thought and crooked deals.He needs to be hauled and charged criminally for this investment,together with Ayo,and then we will get to the truth.

Instead of being a lackey for the EFF,here’s a real job for the PP.But,do you think madam PP will have the guts to investigate?Especially since PIC and VBS are involved in the VBS scandal.NAH.Got more imortant things to do.Like pursueing Cyril and Pravin.

Dear Mr Matjila

I too have an urgent need of a billion rands – does this fit in with the PIC policy of granting loans on the basis of “this course of action was as a result of tight time constraints and having to meet quorum challenges”?

Please contact Moneyweb subscriptions for my contact details. I really would appreciate the money in the bank by the weekend….

By the way, I see that Ayo has a listing of R9.00 and bids of R2.03 and is down 61% year to date. Quite a steal at this race! Steal! Geddit??

End of comments.




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