COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 32/LM/Mar07
In the matter between:
Circle Edu Investments (Pty) Ltd Acquiring Firm
And
EduLoan (Pty) Ltd Target Firm
Panel : D Lewis (Presiding Member), Y Carrim (Tribunal
Member) and M Mokuena (Tribunal Member),
Heard on : 6 June 2007
Decided on : 6 June 2007
Reasons Issued: 29 June 2007
Reasons for Decision
Approval
1] On 6 June 2007, the Tribunal unconditionally approved the merger between
Circle Edu Investments (Pty) Ltd and EduLoan (Pty) Ltd. The reasons for
approving the transaction follow.
The parties
2] The primary acquiring firm is Circle Edu Investments (Pty) Ltd (‘Circle Edu’), a
newly incorporated company formed for the purposes of this transaction. In
turn, Capital Ventures (Pty) Ltd (‘Circle Capital’), a company incorporated under
the laws of the Republic of South Africa, owns 51% interest in Circle Edu and
the remaining 49% is owned by Standard Bank of South Africa (‘SBSA’), a
public company incorporated under the laws of the Republic of South Africa.
3] SBSA is a subsidiary of the Standard Bank Group Limited (‘SBG’) a public
company listed on the JSE Securities Exchange.
4] SBG has several subsidiaries worldwide and in South Africa. Circle Edu does
not control any firm.
5] The primary target firm is EduLoan (Pty) Ltd (‘Edu Loan’), a company
incorporated under the laws of the Republic of South Africa. The shareholders
of EduLoan who hold at least 2% of its shareholding are as follows: 1
[5.1] Standard Bank South Africa (SBSA) 44.98%;
[5.2] Kopano Investments (Pty) Ltd 21.78%;
[5.3] SasfinMDM Private Equity Fund 9.24%;
[5.4] Nulane Investments 131 (Pty) Ltd 5.38%;
[5.5] Sukaren (Pty) Ltd 4.99%;
[5.6] EduLoan Finance (Pty) Ltd 2.82%;
[5.7] JJ Kitshoff 2.34%;
[5.8] MS Waserfall Trust 2.15%;
6] EduLoan controls Winger Technologies (Pty) Ltd (‘Winger’) and EduLoan
Namibia (Pty) Ltd (‘Edu Loan Namibia’), a Namibian Corporation.
Description of the transaction
7] In terms of the transaction, Circle Edu intends to acquire SBSA’s entire
shareholding in EduLoan and thereafter subscribe for additional 10% share in
EduLoan. This will result in Circle Edu having 50.5% share in EduLoan. 2
8] On completion of the transaction Circle Edu will own 50.5% share in EduLoan.
1 The other shareholders include RP Van Wyk (with 1.02% shareholding); HD Steyn (with
0.88% shareholding); B Letshweni (with 0.38% shareholding); HP Steyn (with 0.24%
shareholding); DW van Vuuren (with 0.21% shareholding); MJ Herbst (with 0.19%
shareholding); and SJ Botha (with 0.05% shareholding).
2 See p 2 of the Joint Competitiveness report.
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SBSA will have 49% share in Circle Edu. The balance of 51% share in Circle
Edu will be owned by Circle Capital. The parties submitted that SBSA will
control Circle Edu due to the funding arrangements they have with Circle Edu.
Rationale for the transaction
9] SBSA and EduLoan want to establish a relationship with an empowerment
partner in the Republic of South Africa for the purpose of establishing a black
economic empowerment alliance in the educational finance market.
10] Circle Capital intends to play a strategic role in advancing EduLoan’s position
as a funder of affordable educational finance in South Africa as well as the rest
of Africa.
The parties’ activities
Primary acquiring firm
Circle Edu
11] Circle Edu is a vehicle procured to specifically hold shares in EduLoan and to
procure financing for the proposed transaction.
Circle Capital
12] Circle Capital is an investment holding company that acquires and holds
investments in several companies. It has investments in the companies that are
involved in the leasing offices, health and micro surveillance solutions.
SBSA
13] The SBSA offers a complete range of banking, financial, property, insurance
products and services. SBSA’s activity relevant for the purposes of this
transaction is the provision of student loans. SBSA pays the funds directly to
students who are then responsible for paying the educational institution.
The primary target firm
EduLoan
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14] EduLoan provides educational finance through discounting of student fees with
educational institutions, which comprise the financing of education and auxillary
education services through persal salary deductions, salary deductions and
debit orders. It is a registered microlender.
15] The parties submit that EduLoan was formed to cater for individual students
that did not qualify for finance under the National Financial Student Aid Scheme
(NFSAS) or any of the banking institutions.
16] Winger is an inhouse IT development company that services EduLoan only.
EduLoan Namibia is involved in the financing of educational and agricultural
loans in Namibia
Competition analysis
17] On the face of it, it would appear as if there is an overlap in the activities of the
merging parties in that they both provide finance for higher education. However,
the SBSA gives loans to higher earning market segments while EduLoan will
normally give educational finance to students ho do not qualify for funding from
SBSA and other banking institutions. There is therefore no overlap in the
activities of the merging parties as they target different markets.
Public Interest
18] There are no public interest issues.
Conclusion
19] The merger is approved unconditionally.
________________ 29 June 2007
D Lewis DATE
Presiding Member
Y Carrim and M Mokuena concur in the judgment of D Lewis
Tribunal Researcher : R Kariga
For the merging parties: J Meijer, Bowman Gilfillan Attorneys.
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For the Commission : Not represented at the hearing
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