Automated Summary
Key Facts
The Competition Tribunal of South Africa approved Kagiso Capital's increased shareholding in EMSS Consulting (Alphawave Holdings) from 17.24% to 29.41% via a subscription agreement, granting veto rights. The Commission concluded the transaction would not significantly lessen competition, citing minimal market shares (<1%) and over 100 active private equity firms in South Africa. The transaction was heard on 5 November 2020, with reasons issued on 22 December 2020. No public interest concerns (employment, retrenchments) were identified.
Issues
- The Commission assessed public interest factors, including employment, and found no retrenchments were planned. Employee representatives from both merging parties confirmed no concerns were raised, and the transaction was deemed not to raise other public interest issues.
- The Commission evaluated if the proposed transaction between Kagiso Capital and EMSS would result in a significant lessening of competition in the private equity investment market in South Africa. It concluded that both parties' market shares were less than 1%, and the presence of over 100 private equity firms and international competitors indicated minimal risk of competition reduction.
Holdings
- The Commission concluded that the proposed transaction is unlikely to result in a significant lessening of competition in the private equity investment market, as both merging parties have market shares of less than 1% and face substantial competition from over 100 private equity firms in South Africa, including international firms and industry players.
- The tribunal approved the transaction unconditionally, determining no public interest concerns such as employment issues or broader negative impacts, with merging parties confirming no retrenchments and employee representatives raising no objections.
Remedies
The Competition Tribunal approved the transaction unconditionally, finding no significant lessening of competition or public interest issues.
Legal Principles
Other
Cited Statute
Competition Act, 1998
Judge Name
- Y Carrim
- E Daniels
- A Ndoni
Passage Text
- [17] 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.
- [12] In addition, the Commission recently found in a similar transaction concerning private equity investors that there are over 100 private equity firms operating in South Africa.2 The Commission also found from market participants that there are numerous (possibly around 100) private equity firms operating in South Africa. In addition, private equity firms in South Africa also face competition from international firms, trade players (i.e., firms that are operating in a particular industry and may have an interest in acquiring a stake in a company that is in the same industry), Black Economic Empowerment investors and industrialists.
- [10] The Commission found that the proposed transaction results in a horizontal overlap as both the merging parties are active in the private equity investment market in South Africa. The Commission found that the market for private equity investment currently manages more than R190 billion in assets and that Kagiso Capital and EMSS manage assets of approximately [REDACTED] and [REDACTED] respectively.