COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 52/LM/Jun09
In the matter between:
ABSA Capital Private Equity Fund 1 Acquiring Firm
And
Parchment Trading 72 (Pty) Ltd Target Firm
Panel : D Lewis (Presiding Member) N Manoim, (Tribunal Member),
and M Mokuena (Tribunal Member)
Heard on : 29 July 2009
Order Issued : 29 July 2009
Reasons Issued: 8 October 2009
Reasons for Decision
Approval
[1] On 29 July 2009, the Tribunal unconditionally approved the merger between
ABSA Capital Private Equity Fund 1 and Parchment Trading 72 (Pty) Ltd. The
reasons for approving the transaction follow.
The parties
[2] The primary acquiring firm is ABSA Capital Private Equity Fund 1 (“the Fund”),
an en commandite partnership registered under the laws of the Republic of
South Africa. The fund is controlled by a general partner which is also an en
commandite partner named ABSA Capital General Partner (“the GP Partner”).
The GP Partner’s general partner, in turn, is a trust established and named the
Equity Investment Trust (“the Trust”). The Fund controls Safripol Holdings
Limited (“Safripol”), Bravo Group (Pty) Ltd (“Bravo”), and Tsebo Outsourcing
Group (Pty) Ltd (“Tsebo”).
[3] The primary target firm is Parchment Trading 72 (Pty) Ltd (“BridgeCo”), a
company registered under the company laws of the Republic of South Africa.
BridgeCo is jointly controlled by ABSA Capital Private Equity (Pty) Ltd, the
primary acquiring firm, and the McLean Family Trust. BridgeCo controls
Enviroserv Waste Management (Pty) Ltd (“Enviroserve”).1
Description of the transaction
[4] The proposed transaction involves the transfer to the Fund of ABSA Capital’s
interest in BridgeCo comprising 4000 ordinary shares constituting 40% of the
total issued ordinary shares in BridgeCo; 510 090 preference shares
constituting 62.8% of the total issued preference shares in BridgeCo;
debentures; and contractual rights in terms of the existing shareholders
agreements in respect of BridgeCo.
THE PARTIES’ ACTIVITIES
Primary acquiring firm
The Fund
[5] The Fund is an investment vehicle which was established to carry on the
business of investing. Its principal objective of providing the partners and the
beneficiaries with a return by means of income and/or long-term capital
appreciation through the Fund’s investments in portfolio companies.
Safripol
[6] Safripol produces high density polyethylene and polypropylene which are used
mainly in the packaging, injection-moulding and blow-moulding industries.
Bravo
[7] Bravo is involved in the manufacture and sale of a wide range of household
furniture products.
Tsebo
[8] Tsebo is involved in the following industries, namely, catering services
(branded as Fedics and Equality), facilities management services (conducted
through Drake & Scull) and cleaning services and (conducted through Tsebo
Cleaning Services).
Primary target firm
1 See Annexure E for a list of the companies controlled by Enviroserve.
2
[9] BridgeCo does not have any trading activities. Its primary purpose is to hold the
entire shareholding issued in Enviroserve. Enviroserve is involved in waste
collection, beneficiation of carbon waste products; hiring of earth-moving
equipment in the waste construction and mining industries; medial waste
treatment services; container cleaning services; manufacturing of polymer
composite materials primarily from different waste streams for pallets and dun
decks; provision of tailings management, civil engineering construction and
related services to the mining, waste and general industry; disposal of
hazardous and non-hazardous industrial waste; and medical and residential
waste management services.
Rationale for the transaction
[10] The principal object of the proposed transaction is to remove the ownership,
management and control linkages between ABSA Capital and BridgeCo, and
ultimately Enviroserve resulting in ABSA Capital’s shareholding in BridgeCo
being transferred to and directly held by the Fund.
Competition analysis
[11] There is no overlap between the activities of the merging firms as the primary
acquiring firm does not have investments in the markets where the primary
target firm is active. The proposed transaction is thus unlikely to substantially
prevent or lessen competition in any market.
Public Interest
[12] There are no public interest issues.
Conclusion
[13] The merger is approved without conditions for the reasons mentioned above.
________________ 8 October 2009
N Manoim DATE
Tribunal Member
D Lewis and M Mokuena concurring.
Tribunal Researcher : R Kariga
3
For the merging parties: Webber Wentzel Attorneys
For the Commission : K Mahlakoana (Mergers and Acquisitions)
4