A former investment manager at the Public Investment Corporation (PIC) has testified that IT company AYO's 2017 investment pitch was so ‘unrealistic’ he thought there was little chance a deal would be struck.

‘My hope was we would never do the transaction,’ assistant portfolio manager Victor Seanie told the Western Cape High Court on the first day of testimony in the long-awaited case between the PIC and AYO. 

The case is expected to rely heavily on his and other evidence already presented to the Judicial Commission of Inquiry into the PIC.

Seanie's 2019 affidavit to the commission and record of his testimony have both been submitted as evidence.

The PIC inquiry, which investigated allegations of bad governance and dodgy deals at the asset manager, handed over its final report to President Cyril Ramaphosa in December 2019.

The report included hundreds of recommendations for the PIC to improve governance, launch probes into dubious contracts, and recoup funds from failed investments.

As previously reported, the PIC invested R4.3bn in AYO in late 2017 ahead of its listing on the JSE. AYO's stock has since plunged more than 90% from R43 to just R3.85 a share. 

News24 reports that the state asset manager now wants AYO, which is part of Iqbal Survé's Sekunjalo Group of companies, to repay its investment – plus interest.

It has argued AYO misrepresented what it intended to do with the investment. AYO, which has denied wrongdoing, has in turn accused the PIC of plotting to destroy it, a claim the asset manager has dismissed. Seanie, who served as an assistant portfolio manager at the PIC until he was dismissed in October 2019, was the first witness to give evidence. 

He described an investment pitch meeting in November 2017 with ‘cocky’ AYO representatives where he said he was shown ‘unrealistic’ earnings estimates.

Seanie said AYO projected that it could grow revenues from around R500m to R4bn in just one year, which he had ‘never seen before’ at an SA company.

‘I thought these numbers were unrealistically high,’ he said. In addition, it wanted to list on the JSE just one month after meeting with the PIC – which he described as an ‘exceptionally, unusually’ short period.

‘The transaction was rushed. I felt very uneasy. I felt the transaction was very unlikely,’ he said.

Nevertheless, the PIC subsequently subscribed for all the group's shares at issue at R43 a share.

News24 notes that Seanie has previously said he was made a scapegoat and fired from the PIC for the deal, which he never supported.

The asset manager intends to call 13 witnesses during the civil case. Lawyers for AYO have not yet addressed the court or presented their opening statements.

Full News24 report