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[2016] ZACT 82
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Investment Solutions Holdings Limited v Caveo Fund Solutions Proprietary Limited (LM056JUL16) [2016] ZACT 82 (6 September 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM056Jul16
In
the matter between:
I
NVESTMENT
SOL
U
TIONS
HOLDINGS
L
I
M
I
TED
Primary
Acquiri
n
g
F
i
rm
and
CAVEO
FUND SOLUTIONS PROPRIETARY LIMITED
Primary Target Firm
Panel
: Norman Manoim (Presiding Member)
: Andreas Wessels
(Tribunal Member)
: Fiona Tregenna
(Tribunal Member)
Heard
on
: 10 August 2016
Order
Issued on
: 10 August 2016
Reasons
Issued on
:
06 September 2016
Reasons
for Decision
Approval
[1]
On 10 August 2016, the Competition Tribunal ("Tribunal")
approved the proposed transaction between Investment Solutions
Holdings Limited and Caveo Fund Solutions Proprietary Limited.
[2]
The reasons for approving the proposed transaction follow.
Parties
to proposed transaction
Primary
acquiring firm
[3]
The
primary acq
u
i
ring
firms
i
s
I
nvestment
Solutions
H
oldings
Limited ("ISH"), a publ
i
c
company
i
ncorporated
i
n
accordance with the
l
aws
of the Republic of South Africa.
[1]
[4]
ISH is wholly-owned by Alexander Forbes Group Holdings Limited
("Alexander Forbes"), a company listed on the Johannesburg
Stock Exchange ("JSE").
[5]
ISH and Alexander Forbes will collectively be referred to as the
Acquiring Group.
Primary
target firm
[6]
The primary target firm is Caveo Solutions, a company incorporated in
accordance with the laws of the Republic of South Africa.
Caveo
Solution is jointly controlled by ISH (with a shareholding 50.01%)
and Peregrine with a shareholding of 49.99%.
[7]
Caveo Solutions and its subsidiaries will be referred to as the
Target Group.
Proposed
transaction
and
rationale
[8]
In terms of the proposed transaction ISH intends to increase its
shareholding in Caveo Solutions from 50.1% to 100% by acquiring
the
remaining shareholding (49.99%) from Peregrine. Post-transaction ISH
will control Caveo Solutions.
[9]
The Acquiring Group submits that the proposed merger creates an
opportunity for ISH to reposition its business approximately
to meet
future regulatory and commercial imperatives. The acquisition of
Peregrine shareholding will assist it in this regard.
[10]
Peregrine has taken a decision to dispose its shareholding in the
Target Group in order to establish its own multimanager/fund-of-fund
business within the Peregrine Group.
Impact
on competition
[11]
The Acquiring Group through ISH is an asset manager that adopts the
strategy of allocating the monies it received from retail
and
institutional investors to other asset managers/multi-managers which
then invest the monies in underlying assets (indirect
investment)
whereas the Target Group is a hedge fund manager (multi-manager)
these monies to other hedge fund managers, which in
tum invest the
monies underlying assets (indirect investment).
[12]
The
Commission
considered
the
activities
of
the
merging
parties and found
that
the
proposed
transaction
results
in
a
horizontal
overlap
in
the
broad
market
for
asset
management
services.
The
Commission
found
that
the
merged
entity
will
have
a
combined
post-merger
market
share of 5.1% in the
broad
market
for the provision of
asset
management
services and competes
with
a
number of reputable players
in
the
market.
[2]
[13]
The Commission also found that the proposed transaction results in a
vertical overlap, however the merging parties' competitors
did not
raise any concerns regarding the proposed transaction. Furthermore
the Commission found that with respect to customer foreclosure
the
Target Group status quo remains post-merger. As such the Commission
is of the view that the proposed transaction will not result
in any
input foreclosure or customer foreclosure.
[14]
In light of the above, the Commission is of the view that the
proposed transaction is unlikely to substantially prevent or
lessen
competition within the relevant market.
[15]
We concur with the Commission's conclusion.
P
ub
l
i
c
i
nterest
[16]
The merging parties confirmed that the proposed transaction will have
no negative effect on employment.
[17]
The proposed transaction further raises no other public interest
concerns.
Conclusion
[18]
In light of the above, we conclude that the proposed transaction is
unlikely to substantially prevent or lessen competition
in any
relevant market. In addition, no public interest issues arise
from the proposed transaction. Accordingly, we
approve the
proposed transaction unconditionally.
06
September 2016
DATE
_______________________
Mr.
Norman Manoim
Mr
Andreas Wessels and Prof Fiona Tregenna concurring
Tribunal
Researcher
: Busisiwe Masina
For the
merging parties
: Andriza Liebenberg of Webber Wenzel
For the
Commission
: Billy Mabatamela
[1]
ISH holds a 50.1
%
shareholding in the primary target firm.
[2]
Coronation Fund Managers, Old Mutual Investment Group (Ply) Ltd,
Sanlam Investment Management (Pty)
Ltd
and Allan Gray Limited.