Investment committee report
Dear Stakeholder,
I am thrilled to address you once again, this time from my seat as the chair of the investment committee, and share with you the main activities of the committee during the reporting period.
AYO is a technology investment Group and this central business focus renders tremendous importance on the input and contribution of the investment committee in the achievement of the Group’s strategic priorities. The main purpose of the committee is to inform the Group’s investment strategy, set criteria and targets for investments, evaluate proposals for acquisition and disposal of investments and ensure that proper legal, financial and due diligence processes are strictly followed during acquisition negotiations, so that AYO can continue to create long-term sustainable value for its stakeholders.
Corporate governance regulations stipulate that an investment committee should comprise of a minimum of three directors, including two non-executive and one executive director. As investments are an integral part of our business model and strategy, the Board felt that AYO’s investment committee would benefit from diversity of skills, expertise and viewpoints and five directors fulfilled the function in the previous reporting period, i.e. 2019. This year, we extended the team even further, with the appointments of Khalid Abdulla and Professor Louis Fourie joining the investment committee. We welcome the contribution these two gentlemen have added to the committee already and
appreciate the value of having such strong, knowledgeable and active team involved in the deliberation of critical investment decisions.
The committee met four times during the 2020 financial year, three of which enjoyed full attendance and one apology received on one occasion. In these meetings we deliberated and discussed a number of investment decisions, concerning both current assets in the AYO portfolio and brand new investments.
Unfortunately, the national lockdown imposed in the country on 26 March 2020 significantly affected due diligence investigations on several projects in our pipeline, resulting in delays in negotiations and closings. Notwithstanding, the committee is not deterred and continues to work on said projects and expects a number of deals to be finalised in the next reporting period.
In the last few months, the interim period between the end of the financial year and the publication of this report, the Group has already officially announced its intention and progress on acquiring stakes in Kathea Communications and Disruptive Vision, via the JSE SENS service. We expect to meet all regulatory and statutory requirements for the completion of the two transactions in the very near future and I hope to update you on the inclusion of these strategically important units to the AYO portfolio in my next address. Several other key investment projects are also nearing completion and I invite you to follow our announcements via the JSE SENS, which are available on the AYO website, for timeous information on new investments for the Group.
In respect of investments within our existing portfolio, during the reporting period AYO increased its shareholding in Kulula Communications from 51% to 76%. The committee is of the view that the increased shareholding will improve the subsidiary’s B-BBEE score and empower the business’ competitiveness within the South African trading landscape.
In my 2019 report I mentioned the formation of a specialised FinTech Fund, in which AYO had invested R100 million, which aims to support emerging South African ICT businesses, putting them on an accelerated growth trajectory, thus
driving overall economic growth and development. The committee has been following the performance of the said fund during 2020 and is very pleased with the delivered results. We view the fund’s success as a case study for the
advancement of socio-economic developmental goals, while simultaneously realising robust returns for its shareholders.
The committee will continue to actively advance the Group’s investment strategy in 2021, aiming to achieve significant market penetration and product diversification as well as unlock synergistic value through complimentary portfolio additions. We will look for further expansion opportunities in the SADC and East Africa regions to enhance our geographic footprint and market diversification.
With AYO’s solid investment philosophy and strategy firmly in place and a number of negotiations well under way, I believe we can look forward to a successful year ahead that will deliver meaningful contribution to our society and maximum value creation for our stakeholders.
Dr Wallace Mgoqi
Chair of Investment Committee
22 December 2020
INVESTMENT COMMITTEE MEETING STATISTICS
