Trades in shares of Ayo Technology and AEEI to be investigated

SA’s market conduct regulator is investigating trades in the shares of Ayo Technology Solutions and its main shareholder, African Equity Empowerment Investments (AEEI), for possible market manipulation.

The Financial Sector Conduct Authority (FSCA) said in a report posted on its website on Monday that the “possible prohibited trading practices” happened between May 2018 and June 2018 in Ayo’s case and throughout 2018 in AEEI’s.

Both cases were ongoing, it said. The FSCA was also looking into trades in the shares of AEEI's fishing business, Premier Fishing and Brands.

Other share trades in the spotlight include those in Atlatsa Resources Corporation, Capitec, Fortress Income Fund, Greenbay Properties and Nepi Rockcastle.

According to Bloomberg, Ayo’s share price rose 46% in May 2018, peaking at R41 on May 29.

The illiquid stock, which the Public Investment Corporation (PIC) controversially bought at R43 a share in December 2017, was trading at just R17 on Wednesday.

AEEI, meanwhile, fell 31% in 2018, according to Bloomberg. The share has fallen 36% so far in 2019 to R2.89.

Premier Fishing and Brands' stock fell 19% in 2018.

In February, the Companies and Intellectual Property Commission (CIPC) instructed the Public Investment Corporation (PIC) to recover the R4.3bn it invested in Ayo.

The CIPC argued that in making the investment, the PIC’s directors had knowingly caused harm to Africa’s largest asset manager.

The key issue, said the CIPC, was the extraordinarily high valuation the PIC placed on Ayo’s shares at its listing, when it bought a 29% stake at R43 a share, implying a valuation of R14.8bn.

The PIC responded by saying it had asked its lawyers for advice on how to respond to the compliance notice.

The Ayo investment is also under scrutiny at the Mpati commission of inquiry into the PIC, which is probing allegations of wrongdoing at the company.

hedleyn@businesslive.co.za