COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 42/LM/May11
In the matter between:
Dipula Property Fund (Pty) Ltd Acquiring Firm
And
Asakhe Realty Investment Target Firm
Panel : Norman Manoim (Presiding Member)
YasminCarrim (Tribunal Member)
Merle Holden(Tribunal Member)
Heard on : 22/06/2011
Order issued on : 22/06/2011
Reasons issued on : 07/07/2011
Reasons for Decision
Approval
1] On 22 June2011 the Competition Tribunal (“Tribunal”) unconditionally approved
the proposed transaction involving Dipula Property Fund (Pty) Ltd and Asakhe
Realty Investment. The reasons for approval of the proposed transaction follow
below.
Parties to transaction
2] The primary acquiring firm is Dipula Property Fund (Pty) Ltd (“Dipula fund”), a
private company incorporated in terms of the laws of the Republic of South
Africa. Dipula Fund is controlled by Redefine Properties Ltd (“Redefine”), a
private company incorporated in terms of the laws of the Republic of South
Africa. Dipula Fund wholly owns Dipula Property Investment Trust (“Dipula
Trust”) and Mergence Africa Property Fund (Pty) Ltd (“MAP Fund”). The
acquiring firm will be referred to as “Dipula-Redefine Group.” Redefine is a
property loan stock company which is listed on JSE. Its property portfolio
1
includes rental property, office property, retail property and industrial property.
3] The primary target firm is Asakhe Realty Investment Fund (Pty) Ltd, a company
incorporated in terms of the laws of the Republic of South Africa. Asakhe is
jointly held by Standard Bank Properties (Pty) Ltd (“SBP”) and Safika Holdings
(Pty) Ltd (“Safika”). Asakhe wholly owns Emerald Fire, which is a property
investment company formed to hold the properties of Asakhe as an Investment.
Proposed transaction and rationale
4] In terms of the draft Sale Agreement entered into between SBP, Safika and Dipula
Fund, Dipula Fund is acquiring from SBP and Safika 100% of the linked units of
Asakhe and all claims of whatsoever nature, which SBP and Safika may have
against Asakhe. Simultaneously with the Asakhe transaction, certain transactions
have also been concluded, all of which are interlinked and cross-conditional upon
each other.1
5] The Mergence-Dipula Sale includes the structure of the Mergence portfolio into that
of Dipula Fund. The Mergence-Redefine sale comprises a linked transaction in
which Redefine will sell a portfolio of properties to MAP Trust. Since the Mergence-
Dipula Sale and Mergence-Redefine Sale comprise an internal restructuring of the
Redefine property portfolio and mergence’s and Dipula Fund’s properties fall within
Redefine’s control, there is no ultimate change in control and thus no impact on
competition.
Merging parties’ activities
6] Redefine is a property loan stock company with a diversified portfolio in the
rental property market including office, retail, and industrial sectors throughought
South Africa. Redefine is also active in asset management as an in-house
function within the Redefine group. The Dipula-Redefine Group controls in
excess of five hundred and seventy three (573) properties in 9 provinces. The
property portfolio of the Dipula-Redefine Group includes the properties of Dipula
property portfolio of the Dipula-Redefine Group includes the properties of Dipula
Trust, Redefine, MAP Trust, Hyprop, Attfund and Vunani.
1These transactions are the following:
1.1 In terms of a draft Sale Agreement entered into between the parties to the agreement, Dipula Fund
is acquiring from Redefine and Mergence, 100% of the issued share capital of MAP Fund and all
claims of whatsoever nature and from whatsoever cause arising, which Redefine and Mergence
have against the MAP Fund, and
In terms of a draft Sale Agreement entered into between Redefine, MAP Fund and MAP Trust, MAP Trust is
acquiring from Redefine fifteen (15) property letting enterprises.
7] Asakhe is an investment fund active in the realty sector. Asakhe wholly owns
Emerald Fire, which is a property investment company formed to hold the
properties of Asakhe as an investment. Emerald’s portfolio ranges from industrial
to office property.
Competitive assessment
8] The Commission concluded that there is an overlap with regards to three
relevant product markets namely; office space, retail space and industrial space
in eight geographical areas2.
9] The Commission concluded that the proposed transaction is unlikely to prevent
or lessen competition in the relevant markets, as their post-merger market
shares in the respective markets remaintoo low to have a substantial effect on
competition3.
Public interest
10] The parties submitted that the proposed transaction will have no impact on
employment nor negatively impact any other public interest concern.
Conclusion
11] Based on the above we conclude that the proposed transaction is unlikely to
lead to a substantial prevention or lessening of competition in any relevant
market. Furthermore, no public interest concerns arise from this deal.
Accordingly the proposed transaction is approved unconditionally.
____________________ 07 /07/2011
N Manoim Date
Y Carrim and M Holden concurring
2Rentable C-Grade office space in the Benoni node (Pre-merger: 7.82% and post-merger: 10.22%); Rentable
retail space (neighbourhood and local convenience stores) in the Benoni/Boksburg node (Pre-merger: 6.91% and
post-merger: 9.92%); Rentable retail space (substitutable retail centres) in the Ivory Park node (Pre-merger:
0.91% and post-merger: 3.35%); Rentable retail space (neighbourhood and local convenience centres) in the
Doornfontein. Johannesburg CBD node (Pre-merger: 4.1% and post-merger: 4.3%); Rentable retail space
(community, neighbourhood and local convenience centres) in the Pretoria CBD node (Pre-merger: 12.7% and
post-merger: 18%); Light industrial space in the Kelvin/ Wynberg/ Alexandra node (Pre-merger: 2.23% and
post-merger: 2.6%); Light industrial space in the Robertville node (Pre-merger: 1.98% and post-merger: 3.21%);
Light industrial space in the Roodepoort node (Pre-merger: 0.7% and post-merger: 1.33%)
3Ibid.
3
Tribunal Researcher: ThabaniNgilande
For the merging parties: VaniChetty Competition Law
For the Commission: BhekiMasilela