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[2016] ZACT 54
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Housing Impact Fund South Africa Trust v Mettle Property Solutions Securitisation (RF) Proprietary Limited (LM025MAY16) [2016] ZACT 54 (20 July 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
L
M0
2
5May16
I
n
the
matter
b
etween:
THE
H
OUSING
I
MPACT
F
UND
SOUT
H
AFRICA
TRUST
Primary
Acqu
i
ring
F
i
rm
and
MET
I
L
E
PROPERTY SOL
U
TIONS
SECUR
I
TISATION
(RF)
PROPRIETARY
L
I
M
I
TED
Primary
Target
Firm
Panel
:
AW Wessels
(Presidi
n
g
Member)
:
And
i
swa
Ndoni(Tribunal
M
ember)
:
F
i
ona
Tregenna
(Tribunal
Member)
Heard
on
:
29
Ju
n
e
2016
Order
Issued on
:
29
Ju
n
e
2016
Reasons
Issued on
: 20 July 2016
Reasons
for Decision
Approval
[
1
]
On 29 June 2016, the Competition
Tribunal ("Tribunal") approved
the proposed transaction
between
The
Ho
u
si
n
g
I
mpact
F
u
nd
South Africa Trust ("H
I
FSA")
and Mettle Property Sol
u
tions
Securitisation (RF) (Pty) Ltd
("Mettle").
[2]
The reasons for approving the proposed transaction follow.
Parties
to the proposed transaction
Primary
acquiring firm
[3]
The primary
acqu
i
ri
n
g
firm
i
s
HIFSA.
HIFSA
i
s
a
trust
registered
i
n
terms of
the
l
aws
of
the
Republ
i
c
of
South
Africa
.
I
t
i
s
controlled by
i
ts
trustees, Old Mutual Alternative
I
nvestments
P
r
oprietary
L
i
m
i
ted
("OMAI")
i
n
i
ts
capacity
as
Fund Manager
and
Old
Mutual
Investment
Group
Proprietary
Limited
("OMIG")
as
a
fou
n
d
i
ng
trustee. O
M
AI
i
s
a
wholly-owned
subsidiary
of
OM
I
G.
[4]
HIFSA
i
s
a
"development
i
mpact
fu
n
d"
wh
i
ch
provides i
n
vestments
i
n
to
the
l
ow
i
ncome
h
ousi
n
g
sector.
H
I
FSA
u
n
dertakes
two
types
of
i
nvestments
:
(i)
i
t
i
nvests
i
n
fu
n
ds
or
compan
i
es
that
l
end
money
to
project
compan
i
es
wh
i
ch
undertake
property
development
projects;
or
(ii)
it
forms
a
project
company
with
a
property
developer.
Primary
target firm
[5]
The p
r
i
mary
target
firm
i
s
M
ettle,
a
private
company
i
ncorporated
i
n
accordance with
the company
l
aws
of the Repu
b
l
i
c
of South
Africa
.
Mett
l
e
i
s
a special purpose
veh
i
cle
establ
i
shed
and
owned
by
H
I
F
SA
as
to
50%, Mett
l
e
P
r
operty
Solutions
("MPS")
as
to
25%
and
Metropolitan
Capital
Economic
Fund
(Pty)
Ltd
("MCEF")
as
to
25%.
[6]
Mettle
i
s a
fund si
m
i
l
ar
to HIFSA,
i
nvested
i
n various
residential
l
ow-income
property development projects across So
u
th
Africa.
I
t
originates and
finances
l
ow-i
n
come
property development
projects
.
Pr
o
posed
transaction a
n
d rat
i
onale
[
7]
H
I
FSA
i
nte
n
ds
to
acqu
i
re
the
r
emain
i
ng
i
ssued
share
capital of
M
ettle by
i
n
creasing
i
ts
shareholding
i
n
Mettle from
50%
to
100%.This
will
resu
l
t
i
n HIFSA
havi
n
g sole
control over Mettle post-transaction.
[8]
According
to
the
merging
parties, the proposed transaction will
inter
a/ia
enable
H
I
FSA
to
continue
supporti
n
g
the developments
i
n
which
M
ettle
i
s
i
nvested.
I
mpact
on competi
t
i
on
[9]
The Competition Commission (
"
Commission")
i
dentified
a
h
orizontal
overlap between the activities of the mergi
n
g
parties
i
n
the market for the provision of finance
to project companies in
South
Africa.
[10]
The Commission found
that
HIFSA pre-merger already has
d
e
facto
co
n
trol
over
M
ettle
a
n
d
furt
h
ermore
that both these firms are manged by
O
M
AI.
Thus the status quo re
m
ains
p
ost-merger
and the
p
roposed
transaction therefore
i
s
unlikely to change the structure of the relevant market.
[1
1
]
The
Commission
also
i
dentified
a
vertical
re
l
ationship
between
the
merging parties
since
H
I
FSA
provides
finance
to
M
ettle
for
onwards
l
endi
n
g
to
project
compan
i
es.
The
Commission
h
owever
found that
th
i
s
vertical
overlap
i
s
un
l
i
ke
l
y
to resu
l
t
i
n
any
foreclosure
concerns since
H
I
F
SA
i
s a small
p
l
ayer
i
n
the provision
of
finance
in
South
Africa.
The
Commission
also
found
that
customer
foreclosure
i
s
un
likely
since
Mettle
pre-merger
sourced
financing
on
l
y
from
H
IF
SA
.
[12]
Accordi
n
gly,
the
Commiss
i
on
concl
u
ded
that
the
proposed
transaction
i
s
u
n
l
i
kely
to
substa
n
tially
prevent
or
l
essen
competition
i
n
any
re
l
evant
market. We concur
with th
i
s
finding
.
P
u
blic
i
nterest
[
1
3]
The mergi
n
g
parties co
n
firmed
that
the proposed transaction will
h
ave
no adverse effects on employment and that no retrenchments are
expected as a
consequ
e
nce
of the transaction
.
[1]
[14]
No other pu
b
l
i
c
interest concerns arise from the proposed transactio
n
.
Conclusion
[15]
In
light
of
the
above,
we
concl
u
de
that
the
proposed
transaction
i
s
un
l
i
kely
to substantially
prevent
or
l
essen
competition
i
n
any
relevant
market.
I
n
addit
i
on,
n
o
public
interest
i
ssues
arise
from
the
proposed
transaction.
Accordi
n
gly
we approve the proposed transaction
u
n
conditionally
.
20
Jul y 2016
DATE
_____________________
Mr
AW Wessels
Prof
Fiona Tregenna and Ms Andiswa Ndoni concurring
Case
Manager :
Hayley
Lyle
F
or
the merging parties:
Xolani Nyali
of Bowman Gi
l
fillan
F
or
the
Commission:
Billy
Mabatamela
[1]
Merger
Record
,
inter
alia
page
1
7
.