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COMPETITION TRIBUNAL OF SOUTH AFRICA
In the matter between:
Capital Popfund Proprietary Limited
and
JR209 Investments Proprietary Limited, in respect of
the vacant land and immovable property and
letting enterprise to be constructed on Portion 61
(a portion of Portion 8) of the farm Witfontein 16,
in the City of Ekurhuleni, Gauteng
Case No: LM116sep16
Primary Acquiring Firm
Primary Target Firm
Panel : Norman Manoim (Presiding Member)
: Yasmin Carrim (Tribunal Member)
Heard on
Order Issued on
Reasons Issued on
Approval
: Medi Mokuena (Tribunal Member)
: 1 O November 2016
: 10 November 2016
: 1 December 2016
Reasons for Decision
[ 1 ] On 10 November 2016, the Competition Tribunal ("Tribunal") unconditionally
approved the merger between Capital Propfund Proprietary Limited ("Capital") and
JR209 Investments Proprietary Limited, in respect of the vacant land and immovable
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property and letting enterprise to be constructed on Portion 61 (a portion of Portion 8)
of the farm Witfontein 16, in the City of Ekurhuleni, Gauteng.
[ 2 ) The reasons for approving the proposed transaction follow.
Parties to transaction
Primary acquiring firm
[ 3 ) The primary acquiring firm is Capital, a wholly-owned subsidiary of Capital Property
Fund Limited, which in turn is wholly-owned by Fortress Income Fund Limited
("Fortress"). Fortress is publically listed on the JSE Limited as a Real Estate
Investment Trust and is not controlled by any firm. Fortress and its subsidiaries will
hereinafter be referred to as the "Acquiring Group."
[ 4) The Acquiring Group is a property ownership group which holds various properties
such as industrial, office, retail and development in the Kwazulu-Natal, Gauteng,
Mpumalanga, Western Cape, Limpopo, North West, Eastern Cape and Free State
Provinces.
Primary target firm
[ 5) The primary target firm owns vacant land in the City of Ekurhuleni, Gauteng "the
Target Property." The Target Property is situated at the intersection of R21 freeway
and Link Road in Kempton Park in the Gauteng Province.1 The Target Property is
owned by JR209 Investments Proprietary Limited ("JR209") which is a wholly-owned
subsidiary of M&T Holdings which in turn is wholly-owned by the Tsai Trust.
[ 6) The merging parties intend to develop the Target Property into lettable light industrial
property.
1 The land is described as Portion 62, a portion of Portion 8 of the farm Witfontein 16.
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Proposed transaction and rationale
[ 7] The proposed transaction involves the Acquiring Group acquiring 65% undivided
shares in the Target Property. 2 This will result in Capital enjoying the majority vote at
a Management Committee level with JR209 retaining a veto right in respect of
approving and amending the business plan.
[ 8 ] The Acquiring Group submitted that the proposed transaction is in line with its strategy
to invest and develop A-grade logistics facilities.
Impact on competition
[ 9 ] According to the Competition Commission's ("the Commission") findings the
proposed transaction does not result in a substantial lessening of competition for
reasons which follow. Their investigation found that once the Target Property is
developed, a horizontal overlap would arise between the Acquiring Group as it owns
light industrial properties in the Gauteng Province. In the market for rentable light
industrial property within the Elandsfontein, Spartan/Kempton Park, Jet Park,
Meadowdale, Sebenza/Germiton and Pomona nodes the market accretion would be
less than 5% with an overall market share of less than 20%. The Commission's
analysis also yielded that the merged entity will continue to be constrained by other
competitors in this market such as Growthpoint Properties Limited, Redefine
Properties Limited and Black Pepper Properties Proprietary Limited.
[ 10] In the absence of facts to the contrary, we concur with the Commission's competition
assessment, i.e. that the proposed transaction is unlikely to substantially prevent or
lessen competition in any relevant market.
Public interest
[ 11 ] The merging parties confirmed that the proposed transaction will not result in an
adverse impact on employment.3 The proposed transaction further raises no other
public interest concerns.
Conclusion
2 In the initial notification, Capital intended to acquire 50%.
3 Inter alia merger record page 2.
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Conclusion
[ 12 ] 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
Mr No1if\<1n Manoim
Ms valmin Carrim and Ms Medi Mokuena concurring
Tribunal Researcher: Aneesa Raval
01 December 2016
DATE
For the merging parties: Susan Meyer of Cliffe Dekker Hofmeyr
For the Commission: Nolubabbalo Myoli and Xolela Nokele
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