Cape Town - Evidence on day six of the case in which the Public Investment Corporation (PIC) is looking to dissolve and recoup its R4.3 billion investment in AYO Technology Solutions (AYO) pitted the differences between two financial accounting experts on the deal.
In the witness stand, for the second day running, was Professor Harvey Wainer, an expert on financial matters with a particular focus on valuations.
Wainer is appearing as an expert witness for the PIC, and his mandate and approach to the share subscription agreement and the numbers involved came under the spotlight in his cross-examination by AYO senior counsel, Nazeer Cassim.
Earlier in his evidence, led by PIC senior counsel Vincent Maleka, Wainer had said that in his view the numbers presented by AYO in its pre-listing statement (PLS) were “unrealistic and fanciful”.
This was in contrast to the opinion of his opposite number on the AYO side, André Pieterse, who in his report on the deal, which the two experts had discussed at a meeting outside the court, classed the same data as “realistic, credible and probable”.
Pieterse has over 30 years’ experience in financial services in investment banking and corporate advisory.
Under cross-examination by Cassim, Wainer was forced to concede that the mandates he and Pieterse had were not the same and that only certain matters of principle were discussed at their meeting before the case began.
Cassim had asked Wainer about his mandate on behalf of the PIC, with a view to understanding the context of his evidence.
Wainer said his mandate was to consider revenue growth as stated in the PLS, and the effect on the value of AYO and whether it was not realistic and proper.
When Cassim asked Wainer if he and Pieterse had debated Wainer’s criticism of Pieterse’s report, Wainer said they had not, but that had his opposite number raised it, he would have told him his thoughts.
Pressing his point home with an example, Cassim said: “But you didn’t say to him, ‘look, if you look at paragraphs 69 to 72, your report makes no sense at all.’ You didn’t say that?” Wainer replied he had not. Cassim took Wainer back to the evidence given by the previous witness, PIC listed equities general manager Lebogang Molebatsi, on how the PIC had come to invest in AYO.
Molebatsi had told the court that he followed a particular process before deciding whether to invest on behalf of the PIC.
Molebatsi said the process involved an extensive analysis with many different parts and they had first examined AYO’s business model and strategy because numbers must be seen within the context of an investment case.
He had told the court that in his view the numbers were an outcome of a much bigger discussion, which is the strategic thrust of a business and a business model.
When Cassim asked Wainer if he agreed with Molebatsi’s process, Wainer said he did not argue with the process but that it must be seen in context.
Cassim then retorted: “The PIC did not consult you and ask you, ‘Professor Harvey Wainer, is this a good deal or a bad one?’ Of course, if they had asked you, you would have said to them, ‘don’t touch it’.”
The case is adjourned until Thursday next week.
mwangi.githahu@inl.co.za