Acapulco Trade and Invest, the BEE partner at Lanseria Airport, was last month paid more than R400m by the Public Investment Corporation (PIC) in a move that is said to have incensed the board, which is now contemplating legal action to recoup the funds.
At the heart of the misgivings by the board is that the valuation of Lanseria was grossly overstated by some R1.7bn, opening the door for Acapulco to walk away with the hefty settlement in a situation where it ought to have walked away with little if anything.
The episode raises fresh questions about how the PIC governs complex private sector recoveries and comes less than five years after the Mpati commission found widespread governance failures at the fund.
Acapulco in 2013 received a R333.2m loan from the PIC to buy a 25% stake in Lanseria.
Under the terms of the deal, Acapulco was expected to use reasonable commercial endeavours during the term to raise funds to refinance a portion of the capital loan amount. The final repayment of the capital loan amount was to fall on the 10th anniversary of the first advance date, which came in the latter part of 2023.
Acapulco defaulted on the loan, which had ballooned to about R600m, including interest. The PIC then moved to perfect its security by taking transfer of Acapulco’s shares in Lanseria.
The issue of the valuation of the stake then came into play. The PIC and Acapulco hired professional services firm BDO to conduct the valuation.
The draft valuation by BDO was rejected by both parties, with the firm’s mandate terminated in October 2024.
A month later, the parties appointed Crowe to conduct the valuation. Crowe in January produced its final report, which the PIC disagreed with. Crowe’s valuation was an outlier in that it was far removed from historical valuations of the asset.
Ultimately, the PIC’s view is that Crowe’s valuation inflated the value of Lanseria by about R1.7bn.
The essence of Crowe’s valuation put Acapulco’s stake in Lanseria at about R1bn, opening the door for the company to walk away with a tidy sum, even after losing its shares to the PIC over the R600m debt.
The PIC’s contention was that the Crowe report contained fundamental errors, particularly and most glaringly in the form of double counting.
However, Crowe stuck to its guns and did not change its position and accordingly issued a valuation certificate without altering the valuation to consider the PIC’s concerns.
The PIC then, in writing, informed Acapulco in February that it did not accept the Crowe valuation.
The deadline saw the parties engage in March to try to find an amicable solution, with Acapulco proposing a “walk away” settlement of R306m compensation for, among other considerations, value added by it and commercial relationships it originated.
The PIC then roped in the services of Vunani to provide it with a fairness opinion on the Acapulco proposal. Vunani in April said a fair settlement would be between R244.5m and R277.5m, with a midpoint of R260.4m.
The PIC rejected Vunani’s opinion, as it did not align with its valuation of the asset, sparking an arbitration process.
The PIC decided to put forward one of the officials, suspended chief investment officer Kabelo Rikhotso, to be a witness in a move some of the asset managers believe was meant to deliberately weaken the company’s position.
This is because the official is not a valuation expert, and his testimony was roundly rejected by the arbitration panel chaired by senior counsel Thomas Bokaba.
Assisted by senior counsel Moss Mphaga and Brenda Hurudza, the arbitration’s sole focus was whether the Crowe valuation was vitiated by manifest error.
The tribunal dismissed the testimony by the official largely on account of his not being an expert. The tribunal also rejected the testimony led by the PSG Capital official roped in by the PIC.
In the end, the tribunal upheld Crowe’s valuation of R1.041bn for the 25% equity stake and ordered the PIC to pay Acapulco R411m.
The PIC then sought a legal opinion on the outcome of the arbitration process; the opinion advised it to settle the matter. To this end, the PIC paid Acapulco R411m on October 15.
Lanseria’s other equity partner, Harith, was not party to the dispute between Acapulco and the PIC, despite the public allegations by UDM leader Bantu Holomisa, nor was any money paid to it by the PIC.
The PIC, which marshals about R3.5-trillion in assets, mainly on behalf of government workers, in October placed Rikhotso on precautionary suspension following allegations of misconduct that were levelled against him through a whistleblower report.
The PIC has yet to publicly state the nature of the allegations. However, Business Day has it on good authority that the handling of the Acapulco matter is one of the allegations he has to answer to.
This publication also understands that Rikhotso has ruffled a few feathers in the organisation by lacking consultation on key decisions and by throwing the delegated mandate rule book at those raising concerns on the numerous settlement agreements on non-performing investments, particularly in the unlisted space.
Rikhotso told MPs a few months ago that the current unlisted portfolio had grown from R45bn in 2016 to approximately R73bn in 2025 for assets under management.
