COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 114/LM/Oct08
In the matter between:
Capital Property Fund Ltd Acquiring Firm
and
Monyetla Property Fund Ltd Target Firm
Panel : D Lewis (Presiding Member), Y Carrim (Tribunal
Member) and T Orleyn (Tribunal Member)
Heard on : 26 November 2008
Order issued on : 26 November 2008
Reasons issued on : 22 January 2009
Reasons for Decision
Introduction
[1] On 26 November 2008 the Tribunal approved the acquisition by Capital
Property Fund Ltd of the entire issued share capital in Monyetla Property
Fund Ltd. The reasons follow below.
The transaction and parties
[2] Capital Property Fund Ltd (“Capital”) is acquiring all the linked units in
Monyetla Property Fund Ltd (“Monyetla”) thereby acquiring sole control of
Monyetla.
[3] Capital is not controlled by any single firm. Its three largest shareholders are
Stanlib Asset Management Funds (20.7%), Resilient Property Income Fund
1
Ltd (11.3%) and Old Mutual Life Assurance Company (SA) Ltd (10.6%).
Capital controls 17 subsidiaries.1
[4] Monyetla is controlled by Pangbourne Properties Ltd. Monyetla controls
Monyetla Property Holdings (Pty) Ltd and Monyetla Reality Holdings (Pty)
Ltd.
Rationale for the transaction
[5] According to the merging parties Capital is currently a well rated and liquid
property fund whilst Monyetla is illiquid and small which makes it difficult for
its unitholders to exit from such an investment. The transaction allows Capital
to acquire investment property assets at a fair price with the result that its
market capitalisation is enhanced. In addition, Capital has low gearing and
Monyetla is highly geared. On merging the two funds, the risks inherent in
Monyetla’s level of gearing are eliminated and the overall gearing level in the
enlarged Capital increases in a manner which benefits all Capital unitholders.
Effect on Competition
[6] Both Capital and Monyetla own lettable industrial, office and retail properties
throughout South Africa. The parties’ pr oduct markets overlap in the
Florida/Robertville/Maraisburg Node where both own lettable light industrial
property and in the Sunninghill Node where each of them own grade A office
property.
[7] The total lettable light industrial space available in the
Florida/Robertville/Maraisburg Node is 92 224m ², of this Capital owns
9137m² (i.e. a market share of 9%) and Monyetla 2258m² (representing 2%),
resulting in a combined market share of 11% post the transaction.
[8] Capital owns 18 406 m² of the total lettable grade A office space market in the
Sunninghill Node while Monyetla owns 17 535 m ². This represents a market
share of approximately 5% each of the total available grade A office space of
319 047 m² and a combined market share of 10% post merger.
1 See page 4 of the record.
2
[9] According to the parties there are numerous other competitors present in
both of the geographic markets, of which the largest are Vukile Property Fund
Ltd, Emira Property Fund and Beaux Lane in the
Florida/Robertville/Maraisburg Node and Growthpoint, Gensec and Emira in
the Sunninghill Node.
[10] In light of the above t he Tribunal finds that the proposed transaction is
unlikely to substantially prevent or lessen competition.
PUBLIC INTEREST
[11] The transaction does not raise any significant public interest concerns.
___________________ 22 January 2009
Y Carrim Date
D Lewis and T Orleyn concurring.
Tribunal Researcher: R Badenhorst
For the merging parties: Vani Chetty Competition Law
For the Commission: Thabelo Ravhugoni
3