Marc Hasenfuss Editor-at-large
CEO Khalid Abdulla. Picture: FINANCIAL MAIL
CEO Khalid Abdulla. Picture: FINANCIAL MAIL

The pending sale of African  Equity Empowerment Investments’ (AEEI’s) 30% stake in British Telecoms SA (BTSA) could deliver a bonanza to shareholders, with the group weighing up paying a sizeable special dividend.

Speaking at a presentation of the results for the half year to February, Khalid Abdulla, CEO of AEEI, which holds controlling stakes in JSE-listed Premier Fishing & Brands and Ayo Technology Solutions, confirmed the group would be cash flush after concluding the proposed sale of its 30% stake in BTSA to recently listed Ayo for almost R1bn.

Abdulla said there was scope to pay some of the BTSA sale proceeds to shareholders, but reiterated that AEEI was on an aggressive growth path and would need to retain capital to pursue new opportunities.

"The board must decide [about a special dividend]. There’s no predetermined policy around the BTSA proceeds, but we are aware that some shareholders have been with us for a very long time."

The proceeds from the BTSA sale would equate to more than 200c a share for AEEI, which has negligible debt levels.

Asked about the contentious "blue-sky" valuation placed on 49%-owned Ayo, which listed on the JSE late in 2017 with an inferred market capitalisation of R14.7bn, Abdulla contended that the forward multiples applicable to the technology subsidiary were very reasonable.

Earlier this week, Ayo confirmed a technology services contract, rumoured to be worth R2bn, with energy giant Sasol.

Abdulla said that Ayo would probably clinch two or three "similar-sized" contracts in the next 12 months.

Ayo CEO Kevin Hardy told AEEI shareholders that Ayo was in advanced discussions with several complementary targets. He referred to a "10-company pipeline" that would collectively bring R4.5bn in revenue and R600m in profit after tax.

Abdulla said Premier Fishing was on the lookout for acquisitions, while AEEI was scouting for strategic investments. AEEI’s interim results were clouded by large once-off fair-value gains related to the listing of Ayo. At the revenue line there was a 33% improvement to R604m, and a 35% gain in gross profits.

If the fair-value gains were stripped out, AEEI showed a tripling of operating income to R117m and a more than fivefold increase in profit before taxation to R188m after marked gains in investment income to R54m and profit from equity accounted investments to R29m.

The interim dividend was hiked 65% to 3.3c a share. Shares in AEEI responded positively to the numbers, finishing the day up 12.73% at 620c.

hasenfussm@fm.co.za