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[2019] ZACT 11
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Actis International Limited v Abraaj Investment Management Limited (in provisional liquidation) (LM222Nov18) [2019] ZACT 11; [2020] 2 CPLR 734 (CT) (7 February 2019)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM222Nov18
In
the matter between
Actis
International Limited
Primary
Acquiring Firm
And
Abraaj
Investment Management Limited (in
provisional
liquidation)
Primary Target
Firm
Panel
: Anton Roskam (Presiding Member)
: Andiswa Ndoni (Tribunal Member)
: Medi Mokuena (Tribunal Member)
Heard on
: 19 December 2018
Order Issued on
: 19 December 2018
Reasons Issued on
: 7 February 2019
REASONS
FOR DECISION
Approval
[1]
On
19 December 2018, the Competition Tribunal ("Tribunal")
unconditionally approved the proposed transaction involving
Actis
International Limited ("Actis International") and Abraaj
Investment Management Limited (in provisional liquidation)
("Abraaj
Investment"), hereinafter collectively referred to as the
merging parties.
[2]
The reasons for the approval of the
proposed transaction follow.
Parties to the transaction
Primary
Acquiring Firm
[3]
Actis
International is controlled by Actis LLP ("Actis") which in
turn, is ultimately controlled by Actis GP LLP ("Actis
GP"),
a limited liability partnership incorporated in accordance with the
laws of England. Actis International, Actis and
Actis GP are
hereinafter collectively referred to as the 'Actis Group'.
[4]
The
Actis Group controls a number of firms in South Africa and
internationally. Of relevance to the proposed transaction is Actis
lnternational's subsidiary, Neoma Managers (Mauritius) Ltd ("Neoma").
Neoma was established for purposes of the proposed
transaction.
[5]
The
Actis Group is a global private equity investor which has interests
in consumer, healthcare, financial services, industrial,
energy and
real estate sectors. The Actis Group generally invests in buy-outs of
companies or non-core divisions of large corporations
and in private
companies, seeking to achieve rapid growth organically or through
acquisitions, privatisations or restructurings.
Primary
Target Firm
[6]
The
primary target firm is Abraaj Investment, in respect of certain
private equity funds. Abraaj Investment is ultimately controlled
by
Abraaj Holdings, a company incorporated in accordance with laws of
the Cayman Islands. Abraaj Investment manages a number of
private
equity funds, which in turn control a number of firms (so called
"portfolio companies").
[7]
There
are 16 private equity funds in question (hereinafter referred to as
the "Private Equity Funds").
[1]
Of relevance to the proposed transaction is Abraaj Africa Fund Ill,
Abraaj Africa Fund Ill (B) LP, Abraaj Africa Fund Ill (M) LP,
Abraaj
Private Equity Fund IV LP and Abraaj Private Equity Fund IV (S) LP as
they are the only private equity funds which control
or have
interests in firms in South Africa. Abraaj Africa Fund Ill, Abraaj
Africa Fund 111 (B) LP, Abraaj Africa Fund 111 (M) LP
control Joint
Medical Holdings (Pty) Ltd ("JMH") which in turn, controls
numerous firms. Abraaj Private Equity Fund IV
LP and Abraaj Private
Equity Fund IV (S) LP jointly hold a minority interest in Libstar
Holdings (Pty) Ltd ("Libstar").
[8]
JMH
is active in the market for the provision of private hospital
services. Libstar is broadly active in the foods and services
sector,
namely the manufacture and distribution of food, beverage and other
consumer products.
Proposed
transaction
[9]
Actis
international, through Neoma, intends to acquire the management
rights held by Abraaj Investment over the Private Equity Funds.
Post-merger, Actis International will control the Private Equity
Funds.
Impact
on competition
[10] The
Commission found that the proposed transaction does not give rise to
a horizontal overlap as Actis
International does not have any
interest in the private healthcare sector in South Africa. The
Commission therefore concluded that
the proposed transaction is
unlikely to substantially prevent or lessen competition in any
market.
Public
interest
[11]
The merging parties confirmed that the
proposed transaction will not have a negative effect on the employees
JMH and any other employees
involved in Actis's South African
operations. There are however two employees from Abraaj Investment
(hereinafter referred to as
the "affected employees") who
are likely to be retrenched.
[12]
The Commission was of the view that the
negative effects flowing from the retrenchments are insubstantial for
the following reasons:
(i) Abraaj Investment is in provisional
liquidation, (ii) the affected employees are skilled with years of
experience, and (iii)
the merging parties and the affected employees
are in the process of negotiating voluntary severance packages.
[13]
The
Commission therefore concluded that the proposed transaction is
unlikely to raise any other employment concerns or other public
interest concerns.
Conclusion
[14]
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 other public interest concerns arise
from the proposed transaction. Accordingly, we approve the
proposed
transaction unconditionally.
Mr
Anton Roskam
Ms
Andiswa Ndoni and Mrs Medi Mokuena concurring.
7 February 2019
Date
Tribunal
Researcher:
Hlumelo Vazi
For
the merging parties:
R
Wilson and B Masango of Webber Wentzel
For
the Commission:
B Mabatamela and T Mahlangu
[1]
The Private Equity Funds are as follows: Abraaj Africa Fund Ill,
Abraaj Africa Fund Ill (B) LP, Abraaj Africa Fund Ill (M) LP,
Abraaj
North America Fund II LP, Abraaj North Africa Fund II (B) LP, Abraaj
North Africa Fund II (S) LP, Abraaj Private Equity
Fund IV LP,
Abraaj Private Equity Fund IV (S) LP, Aureos South East Asia Fund II
LP, Aureos South East Asia Fund II-A LP, Aureos
Africa Fund LLC,
Aureos Africa Fund (A) LLC, Aureos East Africa Fund LLC, Kantara LP,
Africa Health Fund LLC, Aureos South Asia.