JSE censures AEEI and PSG Capital over purchase of Saab-Grintek stake
The JSE has imposed public censures on African Equity Empowerment Investments (AEEI) and its then sponsor, PSG Capital, for failing to ask shareholders to approve Saab-Grintek's option to repurchase a stake it sold to the empowerment firm in 2015.
AEEI had acquired about a 25% stake in Saab-Grintek for R120m via subsidiary Bowwood, with the agreement including a call option for the defence company, which it exercised in late 2020 at a cost of R150m.
This option was exercisable solely at Saab-Grintek’s discretion, and not subject to a maximum price, with the agreement stipulating it could be exercised after 60 months and that the market value of the stake would be paid.
Given there was no maximum price and it was at Saab-Grintek’s discretion, JSE listing rules require that it be treated as a category 1 transaction. This means shareholders must give the nod to a deal that could materially affect their investment in the long term.
AEEI had asked shareholders to approve the option after it had already been implemented, at which point it could not be reversed, the JSE said.
PSG Capital has also been censured for failing to do its duty as the former sponsor to AEEI, incorrectly advising it in 2015 that the listings requirements were applicable to the exercise of the option, and not it being granted, the JSE said.
PSG Capital CEO Johan Holtzhausen said on Thursday the group did not agree with the censure, but declined to go into further detail as the advisory firm would be engaging with the JSE.
“Any advice we give is based on a certain set of facts,” said Holtzhausen, adding that that was the first censure of the group established in 1998.
In January 2019, PSG Capital had resigned as AEEI’s sponsor, having advised it on its roles and responsibilities as a listed company.
AEEI is the parent company of Ayo Technology, and the listed trading company of Sekunjalo Investment Holdings, which is chaired and was founded by business-person Iqbal Survé. AEEI did not immediately respond to requests for comment.
Saab-Grintek, majority owned by Sweden’s Saab group, is an SA defence and security company, with capabilities including electronic warfare systems, sensors, training systems and avionics.
Update: January 27 2022
This article has been updated with additional information.
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