1
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM107OCT21
SPE Mid-Market Fund I Partnership (represented by the general
partner, SPE Mid-Market Fund I General Partner (Pty) Ltd)
Primary Acquiring
Firm
And
Q Link Holdings (Pty) Ltd Primary Target Firm
Heard on: 09 December 2021
Order Issued on: 09 December 2021
Reasons Issued on: 10 December 2021
REASONS FOR DECISION
[1] On 9 December 2021, the Competition Tribunal unconditionally approved a
large merger whereby SPE Mid-Market Fund I Partnership ,
represented by the general partner, SPE Mid-Market Fund I General Partner
(Pty) Ltd SPE Fund General Partner , intends to acquire % of the issued
share capital and sole control of Q Link Holdings (Pty) Ltd ( .
[2] The SPE Fund is controlled by its general partner, the SPE Fund General
Partner which is wholly controlled by
Namibia. Sanlam is not controlled by any firm and shareholder and its shares
are widely held.1 Sanlam and its subsidiaries are collectively referred to as the
The SPE Fund controls the following companies: Cavalier
Group of Companies (Pty) Ltd Cavalier and Absolute Pets (Pty) Ltd
).
[3] Q Link is a private company incorporated in accordance with the laws of the
Republic of South Africa and it is not controlled by any of its shareholders. 2 Q
, a private company incorporated in
accordance with the laws of South Africa, with its business address at 6 St Giles
Street, Randburg, Johannesburg, Gauteng Province.
[4] The Acquiring Group is a financial services group in South Africa, with business
interests elsewhere in Africa, the United Kingdom, Europe, India, Australia,
Southeast Asia and the United States of America. The Acquiring Group's areas
of expertise include long-term insurance, financial planning, retirement
planning, trusts, wills, short-term insurance, asset management, risk
1 As of 31 December 2020, the following entities held more than a 5% shareholding in Sanlam:
1 As of 31 December 2020, the following entities held more than a 5% shareholding in Sanlam:
Ubuntu-Botho Investments (Pty) Ltd, as to 13.13%, and the Government Employees Pension
Fund, as to 13.05%.
2 The non-controlling and minority shareholders of Q Link:
%
Partner which is wholly controlled by
2
management and capital market activities, investment services, lending
services and wealth creation. Through its four business clusters, the Acquiring
Group provides financial solutions to individual and institutional clients across a
multitude of market segments.
[5] The SPE Fund falls within the Sanlam Private Equity division, which falls within
the Sanlam Investments cluster. The Sanlam Private Equity division has been
active in private equity investing since 1998 and currently manages a portfolio
of over R on behalf of the Acquiring Group. The Sanlam Private Equity
division recently launched the SPE Fund, a new third-party private equity fund
and Black Fund Manager as defined in the Broad-Based Black Economic
B-BBEE Codes of Good Practice. The SPE Fund has target
capital commitments of R and seeks to partner with entrepreneurs and
family owned businesses to make private equity related, as well as B-BBEE
investments, in South Africa and the rest of Africa.
portfolio currently comprises of the Cavalier 3 and Absolute Pets 4 investments.
The SPE Fund has identified Q Link as its third acquisition.
[6] Q Link is a financial technology business that provides payment collection
solutions to improve collection rates for third-party benefit providers. Q Link is
primarily focused on the insurance industry and processes deductions on behalf
of its clients directly fr
ection solutions
to diversify its revenues. Through QSURE, Q Link has a second operating
business which is a funds collection and disbursement business with a primary
focus on the short-term insurance industry, servicing intermediaries, brokers
and insurers.
SLPC Assessment
[7]
the proposed transaction does not result in a
horizontal overlap. The Commission did, however, identify an existing vertical
relationship between the merging parties as Q Link currently provides payment
collection solutions
payroll deductions, bank deductions and EAO solutions
collection solutions
payroll deductions, bank deductions and EAO solutions
to the Acquiring Group. Q Link has approximately less than 5% market share
for the provision of payment collection solutions in South Africa. There are about
seven other providers of payment collection solutions to downstream rivals of
the Acquiring Group. In addition, the other customers of Q Link (i.e.,
did
not raise any concerns regarding the proposed transaction. The Commission
found that the proposed transaction is also unlikely to result in any customer
foreclosure concerns. In this regard, the Commission found that approximately
internally The largest independent provider of payments
and collections services to the Acquiring Group is Based on the above,
the Commission was of the view that the prosed transaction is unlikely to
substantially prevent or lessen competition.
3 Cavalier Group is a vertically integrated meat producer in South Africa, trading in the
procurement, packaging, sale and distribution of red meat and related products.
4
product range covers a broad basket of pet-related products including food, healthcare products
and accessories.
3
[8] The Tribunal probed the risk of information sharing through Q Link to Sanlam of
who are current Q Link
customers; and whether or not a condition protecting against information
sharing
post-merger, Q Link will continue to operate independently and on a ring-fenced
basis with no preferential treatment given to the Sanlam Group nor will any
competitive information be shared with Sanlam (or vice versa).
[9]
he merging parties provided that there
is sufficient structural independence between them; in that, the private equity
arm of the Sanlam Group (which includes SPE) is a very small part of the group
and Furthermore, there
will be no Sanlam representatives on the Q Link board of directors, nor on the
SPE board nor any of the other SPE-investee companies. Likewise, there will
be no SPE or Q Link representatives on the Sanlam Board of Directors. It was
also asserted that the commercial incentives to violate their independence by
on independence. Failure to ensure that such independence is maintained post-
transaction will likely see Q Link lose customers (and market share). The
sharing did not exist.
Public Interest Assessment
[10] Regarding the proposed the merging parties
provided that the SPE Fund currently does not have any employees in South
Africa or elsewhere. The Commission contacted an employee representative at
Sanlam Investment Management and SPE Fund General Partner,
who confirmed that the proposed transaction does not raise any employment
by
confirmed that none of Q Link employees have raised any
employment concerns regarding the proposed transaction.
[11] Regarding the spread of ownership, Q Link is a level 4 B-BBEE contributor, pre-
merger. Both the SPE Fund and its general partner, SPE Fund General Partner
are black owned in terms of the B-BBEE Ownership Codes. The Acquiring
Group has a historically disadvantaged group shareholding of near 50%. Its
largest historically disadvantaged shareholders are Government Employees
Pension Fund
largest historically disadvantaged shareholders are Government Employees
Pension Fund
black economic empowerment partner, Ubuntu-Botho Investments Limited. The
transaction will also result in the replacement of a foreign private equity
shareholder ( and the introduction of the SPE Fund resulting in Q
Link becoming a majority black owned firm - improving its B-BBEE rating from
Level 4 to Level 2.
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[12] We conclude that the proposed transaction is unlikely to substantially prevent
or lessen competition in any relevant market. Furthermore, it raises no public
interest concerns.
10 December 2021
Mr Enver Daniels Date
Prof Imraan Valodia and Dr Thando Vilakazi concurring
Tribunal Case Manager: Mpumelelo Tshabalala
For the Merging Parties: Sazi Madlala and Richardt van Rensburg of
ENSAfrica
For the Commission: Zanele Hadebe, Thabelo Masithulela and
Tamara Paremoer