It
competitiontribu nal
SOUTH Ar Rte.A
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM130Nov23
In the large merger between:
Units on Jorissen Proprietary Limited Primary Acquiring Firm
And
Varsity Stay 2 Proprietary Limited Primary Target Firm
Panel: L Mncube (Presiding Membe r)
A Ndoni (Tribunal Member)
T Vilakazi (Tribunal Member)
Heard on: 30 January 2024
Order issued on: 30 January 2024
Reasons Issued on: 20 February 2024
REASONS FOR DECISION
Introduction
[1] On 30 January 2024, the Competition Tribunal ("the Tribunal") unconditionally
approved a large me rger between Units on Jorissen Proprietary Limited ("UoJ") and
Varsity Stay 2 Proprietary Limited ("Varsity Stay"). U oJ intends to acquire the 50%
undivided share in a student accommodation property letting enterprise known
as Units on Jorissen (the "Target Property") from Varsity Stay.
Parties to the transaction and their activities
Primary acquiring firm
[2] The primary acquiring firm is U oJ a property investment company. UoJ is controlled
by South African Student Accommodation Impact Investments Proprietary Limited
("SASAII") a holding company that develops and owns Purpose Built Student
Accommodation ("PBSA ") in South Africa. SASAII mob ilises global and local
1
2
institutional capital for investment in PBSAs. SASAII is not controlled by an individual
shareholder.1
[3] In addition to the Target Property SASAII wholly owns Units on Park Street
Proprietary Limited, Units on Station Square Proprietary Limited, and Nala Units
Proprietary Limited . SASAII and its subsidiaries will hereinafter collectively be
referred to as the “Acquiring Group”.
Primary target firm
[4] The primary target firm is the Target Property, a student accommodation property
letting enterprise. The Target Property is jointly controlled by Varsity Stay and UoJ,
the primary acquiring firm in the instant transaction.
[5] Varsity Stay, the seller in this transaction is a wholly owned subsidiary of the
Feenstra Group Proprietary (“Feenstra”) and has no subsidiaries other than its share
in the Target Property.
Proposed transaction and rationale
Transaction
[6] In terms of the sale agreement UoJ will acquire the remaining 50% undivided share
in the Target Property from Varsity Stay. Post-merger, UoJ will own and control
100% of the Target Property.
Rationale
[7] The Acquiring Group wishes to increase its gross asset value. From the seller’s
perspective, Varsity Stay wishes to dispose of its interest in the Target Property as,
its sole shareholder, Feenstra, already has an interest in a PBSA in close proximity
to the Target Property.
1 SASAAI’s shareholders are Momentum Metropolitan Life Limited, Eskom Pension and Provident Fund, the
International Finance Corporation, the Danish Sustainable Development Goals Investment Fund K/S and
Government Institutions Pension Fund.
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Competition assessment
Product market
[8] The merging parties overlap in the supply of student accommodation.
[9] The Tribunal has previously decided in Respublica2 and Urban Impact 3 that the
provision of rentable space in residential properties used for student accommodation
constitutes a relevant product market.
[10] In a more recent case4, the Tribunal raised the question whether university residence
accommodation necessarily forms part of the same market as private student
accommodation. It was not necessary to conclude on the precise scope of the
relevant product market in that case since nothing turned on it.
[11] In the current case, we considered the impact of the proposed transaction on the
market for the supply of rentable space in residential properties used for student
accommodation. We did not receive any evidence suggesting a departure from this
approach.
Geographic market
[12] Regarding the supply of rentable space in residential properties used for student
accommodation, the Tribunal has previously accepted that the relevant geographic
market for the supply of rentable space in residential properties used for student
accommodation is an 8 kilometre radius from the Target Property (see Respublica).
The Tribunal did not receive any evidence suggesting departure from the above
approach.
[13] The Acquiring Group does not own any other rentable student accommodation
properties within 8 kilometres of the Target Property . The Commission found that
there was no geographical overlap. Given that the merger does not raise any
competition concerns, it is not necessary to conclude on the precise scope of the
geographic market.
2 Respublica Student Living (Pty) Ltd & Midrand Varsity Lodge (Pty) Ltd, Masingita Estates (Pty) Ltd,
Sam King Investments Holdings (Pty) Ltd re target properties Midrand Student Village & White House
Lodge (Tribunal Case No. LM245Mar16).
3 Urban Impact Properties (Pty) Ltd & Pulse Student Lifestyle (Pty) Ltd (Tribunal Case N o: LM099Jun18).
4 Growthpoint Student Accommodation Holdings (RF) Ltd & Feenstra Group Developments (Pty) Ltd in respect
of the immovable property and letting enterprise known as Brooklyn Studio (Tribunal Case No: LM174Jan23).
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Impact on competition
[14] The Commission and merging parties submitted that the Acquiring Group controls
the Target Property pre-merger, due to the Acquiring Group’s 50% shareholding in
the Target Property. As such, the merger will not result in any market share
accretion and the competitive position of the Acquiring Group will remain unchanged
post-merger.
[15] No third party raised any competition concerns about this aspect of the proposed
merger.
[16] Consequently, we do not believe that the proposed transaction will give rise to a
likely substantial prevention or lessening of competition in any relevant market.
Public interest
Employment
[17] The merging parties submitted that there will be no job losses nor changes to
employment conditions as a result of the proposed transaction.
[18] The Commission concluded that there will be no negative effect on employment as
a result of this merger. The Commission engaged the employee representatives of
Varsity Stay and the company that conducts the property management functions in
respect of the Target Property . They confirmed that all employees that they
represent were notified and no concerns were raised.
[19] We conclude based on the above, that the proposed transaction is unlikely to raise
any employment concerns post-merger.
Spread of ownership
[20] The Acquiring Group has 3.51% of its shareholding held by historically
disadvantaged persons ("HDPs”) and Varsity Stay does not have any shareholding
held by HDPs.
[21] The Commission found that the transaction results in an increase in the promotion
of a greater spread of ownership by HDPs by 1.75%.
[22] We conclude based on the above, that the proposed transaction is likely to promote
the spread of ow nership post-merger.
Conclusion on public interest
[23] We are not aw are of any other public interest concerns arising in this case.
Conclusion
[24] We conclude that the proposed transaction is unlikely to substantially prevent or
lessen competition in any relevant market and the proposed transaction does not
raise any other public interest concerns.
[25] Accordingly, w e approve the proposed transaction unconditionally.
Signed by:Liberty M ncube
Signed at:2024-02-20 14:11:37 •02:00
Reason:w 1tnessmg u uef1Y M ncuue
-Prof. Liberty Mncube
20 February 2024
Date
Ms. Andiswa Ndon i and Prof. Thando Vilakazi concurring.
Tribunal Case Manager : Bobedi Seleke
For the Merging Parties: Mia de Jager of Adams & Adams
For the Commission: Mishkah Abdool Sattar and Themba Mah langu
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