[7]
In terms of the transaction, Circle Edu intends to acquire SBSA’s entire shareholding in Edu-Loan and thereafter subscribe for additional 10% share in Edu-Loan. This will result in Circle Edu having
50.5% share in Edu-Loan. See p 2 of the Joint Competitiveness report.
[8]
On completion of the transaction Circle Edu will own 50.5% share in Edu-Loan. SBSA will have 49% share in Circle Edu. The balance
of 51% share in Circle Edu will be owned by Circle Capital. The parties submitted that SBSA will control Circle Edu due to the funding arrangements they have with Circle Edu.
Rationale for the transaction
[9]
SBSA and Edu-Loan want to establish a relationship with an empowerment partner in the Republic of South Africa for the purpose of
establishing a black economic empowerment alliance in the educational finance market.
[10]
Circle Capital intends to play a strategic role in advancing Edu-Loan’s position as a funder of affordable educational finance in South Africa as well as the rest of Africa.
The parties’ activities
Primary acquiring firm
Circle Edu
[11]
Circle Edu is a vehicle procured to specifically hold shares in Edu-Loan and to procure financing for the proposed transaction.
Circle Capital
[12]
Circle Capital is an investment holding company that acquires and holds investments in several companies. It has investments in the
companies that are involved in the leasing offices, health and micro surveillance solutions.
SBSA
[13]
The SBSA offers a complete range of banking, financial, property, insurance products and services. SBSA’s activity relevant for the purposes of this transaction is the provision of student loans. SBSA pays the funds directly to students who are then responsible for paying the educational institution.
The primary target firm
Edu-Loan
[14]
Edu-Loan provides educational finance through discounting of student fees with educational institutions, which comprise the financing
of education and auxillary education services through persal salary deductions, salary deductions and debit orders. It is a registered micro-lender.
[15]
The parties submit that Edu-Loan was formed to cater for individual students that did not qualify for finance under the National Financial
Student Aid Scheme (NFSAS) or any of the banking institutions.
[16]
Winger is an in-house IT development company that services Edu-Loan only. Edu-Loan Namibia is involved in the financing of educational and agricultural loans in
Namibia
Competition analysis
[17]
On the face of it, it would appear as if there is an overlap in the activities of the merging parties in that they both provide finance for higher education. However, the SBSA gives loans to higher earning market segments
while Edu-Loan will normally give educational finance to students ho do not qualify for funding from SBSA and other banking institutions. There is therefore no overlap in the activities of the merging parties as they target different markets.
Public Interest
[18]
There are no public interest issues.
Conclusion
[19]
The merger is approved unconditionally.
________________
29 June 2007
D Lewis
DATE
Presiding Member
Y Carrim and M Mokuena concur in the judgment of D Lewis
Tribunal Researcher
:
R Kariga
For the merging parties:
J Meijer, Bowman Gilfillan Attorneys.
For the Commission
:
Not represented at the hearing
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