AEEI shares fall sharply after JSE’s call for Ayo audit
The company’s shares were at their worst level since July 2015 with a 19.6% decline for the week
Shares in African Equity Empowerment Investments (AEEI), Sekunjalo’s public trading company, have lost about a fifth of their value since the company said on Friday last week that it will delay the release of its interim results.
The company’s shares were at R2.30 on Wednesday afternoon — the worst level since July 2015 and a 19.6% decline in the week to date.
While the stock has been forced down by selling pressure — it has fallen 49.5% so far this year — Swiss private bank Julius Bär Group bought into AEEI in the first quarter of 2019, Bloomberg data shows. AEEI’s institutional shareholder base is small.
The investment company said on Friday that it had delayed the release of its interim results “due to unexpected developments within the AEEI group”.
On Monday, it added that it “needed to consider” an announcement by Ayo Technology Solutions, in which it holds a 49.4% stake, and that the JSE had asked the technology company to get its external auditors to check its interim financial statements.
“The board has taken cognisance of the announcement and would like to advise shareholders that AEEI will be releasing its interim results during the course of the week ending April 26 2019,” AEEI said.
It remains to be seen what valuation AEEI will place on its Ayo stake.
The delay in the publication of its results comes after former Ayo executives testified that the technology company had misrepresented its earnings. Former Ayo CEO Kevin Hardy told the commission of inquiry into the affairs of the Public Investment Corporation (PIC) that the company’s CFO was instructed to tamper with its financials.
In December 2017, the PIC controversially invested R4.3bn in Ayo for a 29% stake — allegedly at an inflated valuation.
Last week, Ayo refuted the claims by its former executives that it had misrepresented its financial statements, but said it will comply with the JSE’s directive. The PIC, meanwhile, has vowed to recover its investment.