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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM149Jan20
In the matter between:
Luvon Investments (Pty) Ltd and Changing Primary Acquiring Firm(s)
Tides 91 (Pty) Ltd
And
Investec Property Fund Limited in respect of the Primary Properties
Target Properties Musina Mall & Great North Plaza.
Panel : Enver Daniels (Presiding Member)
: Yasmin Carrim (Tribunal Member)
: Andreas Wessels (Tribunal Member)
Heard on : 04 March 2020
Order Issued on : 04 March 2020
Reasons Issued on : 20 March 2020
Reasons for Decision
Approval
[1] On 04 March 2020, the Competition Tribunal (“Tribunal”) unconditionally
approved the transaction involving Luvon Investments (Pty) Ltd and Changing
Tides 91 (Pty) Ltd and Investec Property Fund Limited in respect of the Target
Properties Musina Mall & Great North Plaza.
[2] The reasons for approving the proposed transaction follow.
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Parties to the proposed transaction
Primary acquiring firms
[3] The primary acquiring firms are Luvon Investments (Pty) Ltd (Luvon) and
Changing Tides 91 (Pty) Ltd (Changing Tides 91).
[4] Luvon is a property investment and development company with a diversified
portfolio of commercial and retail assets throughout South Africa.
[5] Luvon is controlled by East &West Investments (Pty) Ltd and forms part of the
Moolman Group, which is involved in the management and letting of
commercial and retail properties and the development of such properties.
[6] Changing Tides 91 is a property holding company which forms part of the
group controlled by Flanagan & Gerard Group (Pty) Ltd (the Flanagan &
Gerard Group).
[7] The Flanagan & Gerard Group controls a diversified retail property portfolio
(directly or indirectly through its subsidiaries) situated in Gauteng,
Mpumalanga and KwaZulu-Natal.
Primary Target Properties
[8] The primary Target Properties are Musina Mall & Great North Plaza. The
Target Properties are small regional shopping centres situated in Musina
Limpopo.
[9] The seller of the Target Properties is Investec Property Fund Limited. Investec
Property Fund is a real estate investment trust, listed on the Johannesburg
Stock Exchange. Investec Property Fund invests in a diversified portfolio of
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commercial, industrial and retail assets in major South African metropolitan
areas.
Proposed transaction and rationale
[10] Prior to the approval of this transaction, Investec Property Fund and Luvon
Investment each held 66.7% and 33.3% shareholding in the Target Properties.
[11] In terms of the proposed transaction Investec Property Fund intends to sell its
66.7% interest in the Target Properties to Luvon Investments and Changing
Tides 91 who will acquire 16.7% and 50% respectively, in the Target
Properties.
[12] Upon the implementation of the proposed transaction, Luvon Investments and
Changing Tides 91 will each have 50% shareholding in the Target Property.
[13] The Moolman Group submitted that following a consideration of the value of
the proposed transaction as well as the risk profile of the letting enterprise and
the geographic area, it elected to acquire an additional 16.7% share in order
to have a total interest of 50%.
[14] The Flanagan & Gerard Group submitted that this is a good investment
opportunity with increased cross-border trade from Zimbabwe as well as the
fact that tenants and the associated turnover is growing in excess of inflation
and it is possible for rental growth to exceed CPI.
[15] Investec Property Fund submitted that the proposed transaction is line with its
stated objective of value creation through the efficient recycling of capital into
platforms which generate superior risk adjusted returns.
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Impact on competition
[16] The Commission considered the activities of the merging parties and found
that there is a horizontal overlap in their business activities in that they are all
involved in the holding and management of rentable retail properties.
[17] In relation to the geographic overlap, the Commission found that the proposed
transaction does not result in a geographic overlap because Changing Tides
91 does not own properties in Musina. Luvon Investments also does not own
properties in Musina. The Commission submits that the closest retail property
from the Target Properties in which either (or both) Luvon Investments and
Changing Tides 91 hold an interest in, is Thavhani Mall which is located
approximately 138 km from the Target Property.
[18] Given the above, the Commission concluded that the proposed transaction is
unlikely to substantially prevent or lessen competition in any relevant market
in South Africa.
Public interest
[19] The merging parties confirmed that the proposed transaction will have no
adverse effect on employment in South Africa and raises no other public
interest concerns.1
Conclusion
[20] In light of the above, we concluded 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
approved the proposed transaction unconditionally.
1 Merger Record, pages 14.
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20 March 2020
Mr Enver Daniels DATE
Ms Yasmin Carrim and Mr Andreas Wessels concurring
Tribunal Case Manager : Ms Busisiwe Masina
For the merging parties : Ms Misha van Niekerk of Adams & Adams
Attorneys
For the Commission : Ms Sewela Moshoma
Reason: Witnessing Enver
Signed by: Enver Daniels
Signed at: 2020-04-22 10:54:22