COMPETITION TRIBUNAL OF SOUTH AFRICA
Case NO: 45/LM/Apr08
In the matter between
PSG Financial Services Primary Acquiring firm
And
ZS Rational Holdings (Pty) Ltd
Quince Scripfin (Pty) Ltd Primary Target Firms
Panel : N Manoim (Tribunal member); Y Carrim (Tribunal member) and M
Mokuena (Tribunal member)
Heard on : 11 June 2008
Decided on : 11 June 2008
Reasons Issued : 14 July 2008
Reasons for decision
Approval
[1] On 11 June 2008 the Competition Tribunal issued a Merger Clearance Certificate
approving the merger between PSG Financial Services Ltd and ZS Rational Holdings (Pty)
Ltd and Quince Scripfin (Pty) Ltd unconditionally. The reasons for the approval appear
below.
Parties
[2] The primary acquiring firm is PSG Financial Services Ltd (“PSG Financial Services”).
PSG Financial Services is controlled by PSG Group Ltd (“PSG Group”), a public company
listed on the JSE Securities Exchange. PSG Group is not controlled by a single shareholder.
[3] The primary target firms are ZS Rational Holdings (Pty) Ltd (“ZS Rational”) and
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Quince Scripfin (Pty) Ltd (“Quince Scripfin”). Both ZS Rational and Quince Scripfin are
wholly owned subsidiaries of Quince Capital Holdings Ltd. ZS Rational controls Quince
Property Finance (Pty) Ltd (“Quince Property”) and Quince Scripfin does not control any firm.
Transaction
[4] The parties to the transaction submit that they want to unwind their interest and
return all shareholders to their respective position. 1 This unwinding entails PSG Financial
Services acquiring 79.91% shareholding and the trustees for the time being of the Kalander
Trust (“the Kalander Trust”) acquiring 20.09% in ZS Rational. This would be followed by ZS
Rational acquiring the entire issued share capital of Quince Scripfin. On completion, PSG
will own ZS Rational and ZS Rational will own Quince Scripfin.
Rationale
[6] The parties submit that when Reunert, PSG Financial Services and the Kalander
Trust formed a joint venture, i.e. Quince Capital, the intention was to convert it into a bank
and also serve as a niche asset based financing alternative to its clients. However, due to
the subprime crisis which has increased the cost of funding the joint venture, the parties
decided to unwind and restore themselves to their original position.
Parties Activities
The acquiring group
[8] PSG Group is a financial services investment company and does not sell any
products or provide any services. Its portfolio of companies provide a wide selection of
financial services and products, including corporate finance, asset management, stock
broking, local and offshore investment, life insurance, short and longterm insurance,
portfolio management, private equity investments and retail banking. PSG Group holds all its
investments through PSG Financial Services.
[9] PSG Financial Services is a holding company and does not sell any products or
[9] PSG Financial Services is a holding company and does not sell any products or
provide any services. It holds a number of strategic and controlling stakes in a range of
1 This transaction is also related to the Reunert/Quince Capital transaction, filed under
case no: 44/LM/Apr08. The Reunert/Quince Capital transaction entailed Reunert acquiring
the remaining 52.8% shares in Quince Capital from PSG Financial Services and the
Kalander Trust (Reunert already had 47.2% share in Quince Capital). Post-merger, Quince
Capital became Reunert’s wholly owned subsidiary.
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private and public financial services companies. The company relevant for purposes of this
transaction is Online Securities Ltd (“PSG Online”). 2
[10] PSG Online is involved in online trading services to private clients for trading in JSE
listed instruments as well as other financial instrument derivatives, via the PSG Online
website and trading systems provided by PSG Online. In addition, PSG Online provides
trading systems and back office services to registered financial services providers such as
PSG Konsult and other Financial Services Board registered asset managers.
The primary target firms
[10] ZS Rational is the holding company of Quince Property and conducts business
through it. Quince Property is involved in the business of providing bridging finance for
purposes of immovable property transactions.
[11] Quince Scripfin provides loan finance to clients who pledge and cede their
share portfolios as security for the financing. Share portfolio that serve as security for
the loans are managed by PSG Online on behalf of the client. Quince Scripfin, in
order to safeguard its security, rely on PSG Online to compete certain activities on its
behalf in relation to the share portfolio.
Competitive analyses
[12] There is no horizontal overlap in the activities of the merging parties as the acquiring
firm does not provide bridging finance for purposes of immovable property related
transactions. There is, however, a vertical relationship between the activities of the merging
parties in that PSG Online provides services on behalf of Quince Scripfin. These services
include ensuring that documentary requirements of the Financial Intelligence Centre Act
have been complied with by Quince Scripfin prior to it making loans available to clients.
[13] PSG Online’s upstream market share for online stock broking services to retail clients
[13] PSG Online’s upstream market share for online stock broking services to retail clients
is estimated to be 1520% and Quince Scripfin’s downstream market share for providing
loan finance is less than 1%. According to the Commission, this vertical relationship is
unlikely to give rise to any foreclosure concerns as there are alternative players in both the
upstream3 and downstream 4 markets that will serve as an alternative in the unlikely event of
2 PSG Online is a subsidiary of PSG Konsult, a subsidiary of PSG Financial Services.
3 Upstream market participants include Standard Bank, BOE Stockbrokers, Nedbank, Barnard
Jacobs Mellet and ABSA Bank.
4 These include firms such as ABSA, Standard Bank, First National Bank, Nedbank and others.
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the merging parties engaging in a foreclosure strategy.
[14] We therefore agree with the Commission that proposed transaction is unlikely to
substantially prevent or lessen competition in the affected markets.
Public interest
[15] The transaction does not give rise to any public interest issues and is accordingly
approved without conditions.
___________________ 14 July 2008
N Manoim Date
Tribunal Member
Concurring: Y Carrim and M Mokuena
Tribunal Researcher : I Selaledi
For the merging parties : Edward Nathan Sonnenbergs Inc
For the Commission : Xolela Nokele (Mergers and Acquisitions)
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