COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 64/LM/Oct10
In the matter between:
Macquarie Investment Holdings No. 2 (Pty) Limited Acquiring Firm
And
Macquarie Air Finance Limited Target Firm
Panel : Yasmin Carrim (Presiding Member),
Andreas Wessels (Tribunal Member)
And Medi Mokuena (Tribunal Member)
Heard on : 27 October 2010
Order issued on : 27 October 2010
Reasons issued on : 29 October 2010
Reasons for Decision
Approval
1] On 27 October 2010 the Competition Tribunal (“Tribunal”) approved the
acquisition by Macquarie Investment Holdings No. 2 (Pty) Limited of
Macquarie Air Finance Limited. The reasons for approval follow below.
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The Transaction
2] The primary acquiring firm is Macquarie Investment Holdings No. 2
(Pty) Ltd (“MIH”), a company incorporated in accordance with the laws
of New South Wales, Australia. MIH is ultimately controlled by
Macquarie Group Ltd (“Macquarie”), a company incorporated in
accordance with the laws of Victoria, Australia.
3] The primary target firm is Macquarie Air Finance Limited (“MAF”), a
company registered in accordance with the laws or Bermuda. MAF is a
provider of aircraft operating leasing services, it is a global aviation
lessor, providing aircrafts to airlines around the world and advisory and
asset management services to aircraft owners.
4] The transaction is an international one, which was notified in South
Africa because MAF is active in aircraft leasing in South Africa. In
terms of the proposed transaction MIH intends to acquire 62.5% of the
issued share capital in MAF. MIH is controlled by Macquarie, and
Macquarie already has a 37,5% interest in MAF, which it jointly controls
with Och-Ziff Capital Management Group LLC, who own the shares
through Sculptor Investments S.A.R.L. (37.55%) 1. Pursuant to the
proposed transaction, Macquarie will indirectly acquire sole control
over MAF, through MIF, who will own 100% of the issued share capital
in MAF.
The Rationale
5] The parties submit that aircraft operating leasing services are
considered to be an important and growing part of Macquarie’s
business. The parties indicate that MAF will benefit from the
transaction by having access to funding to grow its business from
Macquarie.
1The identity of the minority shareholders constitutes confidential information.
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The parties and their activities
6] Macquarie, together with its various subsidiaries, is a diversified
international provider of specialist financial, banking, advisory,
investment and fund management services. No single shareholder in
Macquarie is able, either solely or in agreement with others, to exercise
decisive influence over Macquarie.
7] MIH has no business activities in South Africa.
8] Macquarie’s business within South Africa, through various subsidiaries
includes the following:
a. Institutional stock broking;
b. Equity financing;
c. Equity derivative market making;
d. Structured finance; and
e. Corporate and project finance advisory services.
9] A stated above MAF is a provider of aircraft operating leasing services,
it is a global aviation lessor, providing aircrafts to airlines around the
world and advisory and asset management services to aircraft owners.
10]MAF has a number of subsidiaries globally; however none of these
subsidiaries are active in South Africa. It does however own 10 aircraft
which are on lease to a South African customer.
11]MAF owns 90 jet aircraft leased to operators internationally. Under an
operating lease, a lessor acquires an aircraft and in turn leases it to an
airline operator. At all times the lessor retains full ownership interest in
the aircraft while the lessee is responsible for the operational costs
and risk.
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The relevant market and the impact on competition
12]There is no overlap between the activities of the merging firms
because MIH has no activities in South Africa, and none of the
products/services offered by Macquarie can be considered to be
interchangeable with, or substitutable for, the services provided by
MAF within the South African market.
13]There is therefore no product or geographic overlap in the activities of
the merging parties.
14]In light of the above, we find that the transaction would not
substantially prevent or lessen competition the relevant markets.
CONCLUSION
15]There are no significant public interest issues and we accordingly
approve the transaction.
____________________ 29 October 2010
Yasmin Carrim DATE
Andreas Wessels and Medi Mokuena concurring.
Tribunal Researcher: Thandi Lamprecht
For the merging parties: Webber Wentzel Attorneys
For the Commission: Nazeera Ramroop
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