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[2018] ZACT 50
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Urban Impact Properties Limited v Pulse Student Lifestyle (Pty) Ltd (LM099Jun18) [2018] ZACT 50 (24 August 2018)
COMPETITION TRIBUNAL OF SOUTH
AFRICA
Case
No: LM099Jun18
In
the matter between
Urban
Impact Properties
Limited
Primary Acquiring Firm
And
Pulse
Student Lifestyle (Pty)
Ltd
Primary Target Firm
Panel
:
Ms Yasmin Carrim (Presiding Member)
:
Prof lmraan Valodia (Tribunal Member)
:
Ms Andiswa Ndoni (Tribunal Member)
Heard
on
: 15 August 2018
Order
Issued on : 15 August 2018
Reasons
Issued on : 24 August 2018
REASONS
FOR DECISION
Approval
[1]
On
15 August 2018, the Competition Tribunal (“the Tribunal”)
unconditionally approved the large merger between Urban
Impact
Properties Limited ("UIP") and Pulse Student Lifestyle
(Pty) Ltd ("PSL").
[2]
The
reasons for the approval follow.
Parties
to the transaction and their activities
[3] The
primary acquiring firm is UIP, a property and investment holding
company, with
a focus on rental properties for both residential and
student accommodation. UIP is wholly owned by the Housing Impact Fund
South
Africa ("HIFSA"), a trust that finances the
construction of housing in urban and underdeveloped areas. HIFSA is
ultimately
owned by Old Mutual Group Holdings (SA) (Pty) Ltd
("OMSA"), an investment holding company for a large number
of subsidiaries
whose activities span various markets, including
property investment and development. UIP, its subsidiaries and
controllers are
hereafter referred to as the Acquiring Group.
[4]
The
primary target firm is PSL, a firm that existed as a shelf-company
prior to the proposed transaction, with its entire share
capital held
by Pulse Urban Properties (Pty) Ltd ("PUP"). PUP is active
in the property development and investment holding
markets, with its
primary focus on affordable residential and student accommodation.
PUP is ultimately owned and controlled by
True Group Investment
Holdings.
[5]
As
part of the proposed transaction, PUP will transfer 17 new and
established student and residential properties to PSL which
thereafter
constituted its property portfolio.
Proposed
transaction and rationale
[6]
In
terms of the proposed transaction, UIP intends to acquire 100% of the
issued shareholding in PSL from PUP.
[7]
UIP
stated that the rationale for the proposed transaction was to grow
its asset base with well-priced, income generating properties,
whereas PSL wished to dispose of the assets to a well-established
company with the necessary expertise and resources to run them.
Relevant
market and impact on competition
[8]
In investigating the proposed transaction, the Competition Commission
("Commission")
found that the Acquiring Group holds a
number of investment properties, leading to horizontal overlaps in
the following markets:
i.
Provision of rentable student
accommodation in Pretoria
ii.
Provision of rentable residential
accommodation in Johannesburg
iii.
Provision of rentable residential
accommodation in Cape Town
[9]
In
the markets for rentable student accommodation in Pretoria and
rentable residential accommodation in Johannesburg, the post-merger
entity will hold estimated market shares of below 5% in both areas
and continue to face strong competition from other available
properties.
[10]
In the market for the provision
of rentable residential accommodation in Cape Town, the Commission
found that the merging parties'
respective properties are not actual
competitors. This is because they are situated more than 8km away
from one another and, due
to price differences, target different
customer groups. We are accordingly satisfied that the proposed
transaction is unlikely
to result in a significant lessening of
competition in any of the relevant markets.
Public
interest
[11]
The merging parties submitted
that the proposed transaction will have no negative effect on
employment. The Commission was satisfied
that there is unlikely to be
any job losses arising out of this merger as the firms will continue
to operate as is post-merger.
[12]
The proposed transaction further
raised no other public interest concerns.
Conclusion
[13]
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.
Ms
Yasmin Carrim
Ms
Andiswa Ndoni and Prof lmraan Valodia
24 August 2018
Date
Tribunal
Researcher:
Jonathan Thomson
For
the merging parties:
Jason Van
Dijk of Norton Rose Fulbright
For
the Commission:
Nolubalalo Myoli and Ratshidaho Maphwanya