After failing to list Sagarmatha Technologies on the Johannesburg Stock Exchange (JSE), media owner Iqbal Survé has set his sights on a listing on the New York bourse and others, saying the Public Investment Corporation (PIC) missed an opportunity to invest in an e-commerce company that would rival the likes of Amazon and Alibaba.
Survé made these comments before the PIC commission on Tuesday where he responded, on record, to allegations of impropriety regarding transactions between the PIC and companies under Sekunjalo Investment Limited, which are ultimately controlled by the Survé family trust.
Accusations of sabotage by jealous competitor media outlets, charges of racial discrimination and a loss in memory featured in Survé’s testimony.
In summary, his testimony was that the PIC has no exposure to Sagarmatha and that the controversial investment in Ayo Technology Solutions is viable and will remain so if the PIC does not threaten it with negativity and obstacles.
Sagarmatha had planned to list Africa’s “first unicorn”, a tech start-up company with a valuation of more than $1-billion, in 2018 but these ambitions were short-lived when the JSE decided against the listing. The local exchange cited failure by the company to submit financial results on time as reasons for pulling the plug.
Read: And so the unicorn died
Sagarmatha had planned to raise capital of between R3 billion and R7.5 billion through the listing as a “precursor to a much more capital raise on a foreign exchange”. The PIC would have invested R3 billion of this amount and other investors would bring in the rest.
Survé explained to the commission that the listing did not proceed because the Companies and Intellectual Property Commission (CIPC) had baselessly raised an issue with one of Sagarmatha’s subsidiary companies goaded by “negative propaganda” by media competitors.
He said this “forced the JSE to look for a reason to scupper the listing”.
New York Stock Exchange and beyond
The “only” reason that Sagarmatha wanted to list on the JSE was that at the time, the South African government did not allow primary listings of companies such as Sagarmatha on foreign exchanges, Survé testified.
“We have applied to the South African Reserve Bank’s exchange control for permission for a primary listing in New York and, or other exchanges,” said Survé.
Survé said he had no doubt that Sagarmatha would reach a market capitalisation of $10 billion dollars on the American bourse.
Previously, the PIC’s general manager for listed equities Lebogang Molebatsi Molebatsi testified that the PIC’s transaction team’s assessment of Sagarmatha revealed that it was overvalued and had no business merit. The transaction team had valued the share at R7.06, significantly lower than Sagarmatha’s asking price of R39.62 per share. The e-commerce company also wanted to use some of the money raised in the public offering to buy Independent Media, which has a R1 billion loan with the PIC.
‘A good friend’
Concerns about Sagarmatha were heightened at the time because the team had just concluded the Ayo transaction in December 2017 where the PIC invested R4.3 billion or R43 per share for a 29% stake in the company despite similar concerns raised by the team that Ayo was overvalued.
The share was trading at around R15 Tuesday morning.
The deal was signed by former acting chief executive Dan Matjila without following proper approval processes and completing the due diligence required.
Victor Seanie, assistant portfolio manager at the PIC, told the commission that Matjila’s close relationship with Survé was the primary driver of the state asset manager’s investment in Ayo. He said in a meeting on the Sagarmatha deal Survé had said that Matjila was a “good friend”.
Evidence leader Advocate Jannie Lubbe asked him to confirm whether he had said this, to which Survé responded: “I don’t recall that at all.”
“Do you deny it,” Lubbe pressed.
“You’re asking me to recall something that happened a long time ago,” Survé retorted.
Commissioner Judge Lex Mpati asked again if this may or may not have happened, to which Survé said: “I don’t think so.”
Survé said he would not describe Matjila as a personal friend but considered him a friend in the context of someone who is successful and whom he had great admiration for.