COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:01/LM/Jan11
In the matter between:
Housing Impact South Africa Acquiring Firm
And
Rand Leases Securitisation Target Firm
Panel : N Manoim (Presiding Member)
Y Carrim (Tribunal Member)
M Mokuena (Tribunal Member)
Heard on : 16 February 2011
Order issued on : 16 February 2011
Reasons issued on : 03 May 2011
Reasons for Decision
Approval
1] On 16 February 2011 the Competition Tribunal approved the
acquisition by Housing Impact Fund South Africa of Rand Leases
Securitisation (Pty) Ltd. The reasons follow below.
The Transaction
2] Old Mutual Assurance Company (“OMLACSA”) is restructuring its
assets and will transfer its 50% shareholding in Rand Leases
Securitisation to the acquiring firm Housing Impact Fund South Africa
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(“HIFSA”).
3] HIFSA which is a newly formed trust established as a vehicle to enable
investment into low-income housing projects. Investors in the trust are
OMLACSA, which manages the trust, (holding 54.6%), DBSA (32.8%),
PIC (11%) and Eskom (1.6%).
4] The primary target, Rand Leases Securitisation, is a joint venture
owned by OMLACSA (50%) and Rand Leases Properties (Pty) Ltd
(50%).
5] Post the transaction Rand Leases Securitisation will be owned by
HIFSA (50%) and Rand Leases Property (Pty) Ltd (50%).
The Rationale
6] OMLACSA wishes to dispose of all its assets which will be transferred
to HIFSA in order to obtain capital commitments from the investors in
the fund. It is envisaged that HIFSA’s total investments will be split into
80% in housing projects and 20% in non-housing projects such as
schools, clinics and urban renewal projects.
The parties and their activities
7] As indicated above HIFSA has been created as a housing fund with the
view to enable investment into low-income housing projects. HIFSA
currently has no interest in any residential development.
8] Rand Leases Securitisation focuses on the development of low to
middle income property. It purchases immovable property which it sells
after the property is developed by Rand Leases Property (Pty) Ltd. It
currently owns seven projects in Southern Johannesburg, Roodepoort,
Bram Fischerville, Krugersdorp, Alberton and Boksburg.
The relevant market and the impact on competition
9] The merging parties’ activities do not overlap horizontally but the
transaction will have a vertical impact on the market as HIFSA will, in
future, provide finance to Rand Leases Securitisation for the
development of its projects.
10]This will however not raise foreclosure concerns as there are a number
of competitors that invest in low-income housing that provide finance
for affordable housing projects which compete with HIFSA, such as the
for affordable housing projects which compete with HIFSA, such as the
major competing banks and the National Housing Finance Corporation.
Downstream large competitors such as Group 5, Grinaker, Stefannuti
Stocks, Cosmopolitan, South Net and RBA compete with Rand Leases
Securitisation in developing low/middle income housing.
11]In light of the above, we find that the transaction would not substantially
prevent or lessen competition in the relevant markets.
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CONCLUSION
12]There are no significant public interest issues and we accordingly
approve the transaction.
____________________ 03 May 2011
Y Carrim DATE
N Manoim and M Mokuena concurring.
Tribunal Researcher: Rietsie Badenhorst
For the merging parties: Cliffe Dekker Hofmeyr
For the Commission: Lerato Monareng
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