competitiontribunal
SOUi'H AFR ICA.
COMPETITION TRIBUNAL OF SOUTH AFRICA
Greenstreet 1 (Pty) Ltd
And
Case no: LM096SEP24
Primary Acquiring Firm
Scatec Solar SA 164 (Pty) Ltd
Scatec Solar SA 165 (Pty) Ltd
Primary Target Firms
Panel
Hea rd on
O rder issued on
Reasons issued on
Introduction
T Vilakazi (Presiding Member )
I Valodia (Tribunal Member )
G Budlender (Tribunal Member )
25 October 2024
25 October 2024
12 November 2024
REASONS FOR DECISION
[1] On 25 O ctober 2024, the Competition Tribunal ('Tribunal") unconditionally
approved a large merger in terms of w hich Greenstreet 1 Proprietary Limited
("Greenstreet") w ishes to acquire an additional-the issued shares in both
Scatec Solar SA 164 Proprietary Limited ("Scatec 164") and Scatec Solar SA
165 Proprietary Limited ("Scatec 165") from Scatec ASA.
[2] On comp letion of the proposed transaction, Greenstreet's shareholding in
Scatec 164 w ill increase from-to-and in Scatec 165 it will increase
from Greenstreet w ill hold a controlling shareholding in both
Scatec 164 and Scatec 165.
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2
Parties and their activities
Primary acquiring firm
[3] The primary acquiring firm is Greenstreet, a company incorporated in
accordance with the laws of South Africa. Greenstreet is wholly owned by
STANLIB Infrastructure Fund II (“STANLIB II”) and is represented by its general
partner STANLIB Infrastructure GP 2 Proprietary Limited (“GP 2”).
[4] STANLIB II is managed by STANLIB Asset Management Proprietary Limited
(“STANLIB Asset Management”) as its investment manager. STANLIB Asset
Management is also the investment manager of STANLIB Infrastructure Fund I
(“STANLIB I”) which is represented by its general partner STANLIB
Infrastructure GP 4 Proprietary Limited (“GP 4”).
[5] STANLIB Asset Management is controlled by STANLIB Limited which is in turn
wholly owned by Liberty Holdings Limited (“LHL”). LHL is wholly owned by
Standard Bank Group Limited (“SBG”). SBG is a public company registered on
the JSE Limited and Namibian Stock Exchange and is thus not controlled by
any firm.
[6] STANLIB I is controlled by its general partner GP4 and holds the following
interests in the renewable energy sector in South Africa:
6.1.
6.2. Scatec Solar 164, one of the primary target firms through a
interest held by
6.3. Scatec Solar 165, one of the primary target firms through a
interest held in
6.4. Simacel 160 Proprietary Limited (“Project Dreunberg”) through a
direct interest of and an indirect interest of held by Scatec
164;
--
1111 1111
6.5. Scatec Solar Kalkbult (RF) Proprietary Limited ("Project Kalkbult")
through a direct interest oflllland an indirect interest ofllllheld
by Scatec 165;
6.6. Simacel 155 Proprietary Limited ("Project Linde") through a direct
interest of-an indirect interest ofllllheld by Scatec 165;
6.7. Kouga W ind Farm (RF) Proprietary Limited ("KWF ") w ith a -
direct interest;
6.8.
6.9.
6.10.
6.11.
[7] Greenstreet controls the following firms:
7.1. Mulilo Renewable Energy Solar PV Prieska (RF) Proprietary Limited
astcllllllll
7.2. Mulilo Renew able Energy Solar PV De Aar (RF) Proprietary Limited
astcllllllll
7.3. Solar Capital De Aar 3 (RF) Proprietary Limited as tollll;
7.4.
7.5. Kouga W ind Farm (RF) Proprietary Limited as to-and
7.6. Solareff Proprietary Limited as tollll
[8] Greenstreet, its controlling entities and all the firms controlled by its controlling
entities will collectively be referred to as the "Acquiring Group".
[9] Greenstreet is a renewable energy investment platform. Greenstreet invests in
renew able energy assets such as independent pow er producer project
compan ies ("IPPs") operating under the Renew able Energy Independent
Power Producer Programme ("REIPPPP") and in Solareff. Solareff is a supplier
3
4
of renewable solar PV energy to the private, commercial, industrial, agricultural
and mining sectors locally.
Primary target firms
[10] The primary target firms are:
10.1. Scatec 164, a company incorporated in accordance with the laws of
the Republic of South Africa.
10.2. Scatec 165, a company incorporated in accordance with the laws of
the Republic of South Africa.
[11] Scatec 164 controls the following firms:
11.1. Project Dreunberg
11.2. Project Linde
[12] Scatec 165 controls Project Kalkbult
[13] Project Kalkbult, Project Dreunberg and Project Linde will collectively be
referred to as the “Target Project Companies”.
[14] Scatec 164 and Scatec 165, its controlling entities and all the firms controlled
by its controlling entities will collectively be referred to as the “Target Group”.
[15] Scatec 164 and Scatec 165 are special purpose vehicles incorporated to hold
interests in certain IPPs operating under the REIPPPP. Scatec 164 and Scatec
165 have a controlling shareholding in each of the Target Project Companies.
Transaction
[16] In terms of the proposed transaction, Greenstreet will acquire an additional
shareholding in both Scatec 164 and Scatec 165 from Scatec ASA.
1 The remaining shareholding is held by STANLIB I
2 The remaining shareholding is held by STANLIB I
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11111111
1111
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Indivisibility
[17] The transaction was notified as one indivisible transaction. The Competition
Commission (“Commission”) considered the Tribunal’s precedent which is
premised upon two essential elements, namely that there should, inter alia ,
exist a legal and a factual justification for the subject transaction to be regarded
as a single indivisible transaction.3
[18] The Commission found that the proposed transaction constitutes an indivisible
transaction for several reasons including that: (i) the Target Firms are both
controlled by Scatec ASA; (ii) acquisition of the Target Firms and in turn the
Target Project Companies forms part of a composite transaction; and (iii) the
Target Firms are involved in the same line of business. Accordingly, the
Commission concluded that both a factual and legal basis exists to consider the
transaction as indivisible.
[19] We are satisfied that the transactions are indivisibly linked.
Rationale
[20] From the Acquiring Group’s perspective, the rationale for the proposed
transaction is to increase its investment in infrastructure projects in which the
Acquiring Group holds existing interests.
[21] The Target Firms submit that the proposed transaction presents an opportunity
for Scatec ASA to further its growth in the region as well as abroad.
Competition assessment
[22] The Commission considered the activities of the merging parties and found that
the proposed transaction results in a horizontal overlap since the merging
parties are active in the market for the supply of Solar PV to Eskom in terms of
3 Premier SA (Pty) Ltd and Talhado Fishing Enterprises (Pty) Ltd (LM299Mar18).
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the REIPPPP. The Target Project Companies have already concluded supply
agreements with Eskom under the REIPPPP and are already in operation. In
addition, we note that they are only allowed to provide solar PV to Eskom and
no other customer.
[23] The Acquiring Group has a total market share in the range of 10% – 15%
(including the Target Project Companies) measured in terms of total capacity
in the national market for the supply of solar PV energy to Eskom under the
REIPPPP, and that this will not change as a result of the proposed transaction.
The Target Project Companies have market shares in the range of 1% – 5%.
[24] We find that the proposed transaction does not raise competition concerns in
any market in light of the fact that the Acquiring Group is increasing its
shareholding in the Target Firms from a non-controlling to a controlling
shareholding but without any market share accretion.
[25] We conclude that the proposed transaction is unlikely to substantially prevent
or lessen competition in any relevant market.
Creeping mergers
[26] The Commission noted an increase in recent years of the acquisitions by the
Acquiring Group. The Commission assessed the extent of consolidation in the
market involving the Acquiring Group, if any, as contemplated in section
12A(2)(k) of the Act (so-called creeping mergers).
[27] The merging parties submitted that Greenstreet only implemented five 4 large
mergers in the past four years and one 5 merger that was not notifiable to the
Commission.
4 These cases are: (i) Mulilo Renewable Energy Proprietary Limited and MRE Prieska and MRE DE AAR , Case
Number: LM174Mar20; (ii) Greenstreet 1 Proprietary Limited and Solar Capital DE AAR 3 (RF) Proprietary Limited,
Case Number: LM155Nov20; (iii) Greenstreet 1 Proprietary Limited and Scatec Solar South Africa B.V. , Case
Number: LM184Feb23; (iv) Greenstreet 1 Proprietary Limited and Kouga Wind Farm (RF) (Pty) Ltd, Case Number:
LM094SEP23;) and (v) Greenstreet 1 Proprietary Limited and Solareff (Pty) Ltd, Case Number: LM069Aug23.
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[28] In its creeping merger assessment involving private equity firms, the
Commission and the merging parties considered the Tribunal’s previous
decision in the transaction between Greenstreet 1 Proprietary Limited and Solar
Capital DE AAR 3 (RF) Proprietary Limited, where the Tribunal found that given
the short-term nature of private equity investments, any concerns of
concentration contemplated in section 12A(2)(k) of the Act are unlikely. 6 The
merging parties further submitted that the number of IPP projects in which the
merger parties have interests pre-merger is only 10 out of 104 existing IPP
projects (of which 95 are solar PV projects). Through the proposed transaction,
the merging parties’ involvement in IPP projects will remain at ten, which is
relatively limited.
[29] Accordingly, the Commission identified no creeping merger concerns that are
raised by the proposed transaction. We agree with this assessment.
Public interest
Effect on employment
[30] The Target Firms have no employees.
[31] The Commission contacted the employee representatives of the Acquiring
Group and obtained confirmation that no employment concerns were raised in
relation to the proposed transaction. Furthermore, we take into account the
unequivocal statement of the merging parties that the transaction will not lead
to any merger-specific job losses or retrenchments.
[32] In light of the above, we conclude that the proposed merger does not raise
employment concerns.
6 Case Number: LM155Nov20.
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Effect on the promotion of a greater spread of ownership
[33] The Commission found that Acquiring Group currently has an effective
shareholding by historically disadvantaged persons (“HDPs”) of approximately
29.34%.
[34] In respect of the Target Firms, the Commission found that post-merger, the
shareholding of HDPs in Scatec 164 will increase from a range of 5%-10% to
20% - 25% and from a range of 5%- 10% to 20%-25% in Scatec 165.
[35] The Commission’s investigation further found the following in respect of the
Target Project Companies;
35.1. The HDP shareholding in Project Kalkbult will increase from a range
of 20% - 25% to a range of 35% - 40%; and
35.2. The HDP shareholding in Project Linde will increase from a range of
25% -30% to a range of 35% - 40%.
[36] Accordingly, the proposed transaction will result in an increase in the levels of
ownership by HDPs.
Other public interest considerations
[37] The proposed transaction raises no other public interest concerns.
Third Party views
[38] No third party expressed concerns about the proposed transaction.
Conclusion
[39] For the reasons set out above, we approve the proposed transaction without
conditions.
Signed by.Prof Th•ndo V lekazl
$l!Jted at2024-11-t212:2,4:01 +02;00
Reason:Wtnesslng Prof Thaindo V'llakal:I
Prof T Vilakazi
12 November 2024
Date
Adv G Budlender SC and Prof I Valodia concurring.
Tribunal Case Manager:
For the Merging Parties:
For the Comm ission:
Nomkhos i Mthethw a-Motsa
Leana Engelbrecht of Alchemy Law Africa Inc
Mishkar Sattar, Nd ivhuw o Moleya and Ratshi
Maph w anya
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