BY SAM ALFAN.
Competition Authority of Kenya has approved the proposed acquisition of 100 percent of the issued share capital of Nova academies Tatu City properties limited by Heri Holding limited.
The unconditional approval has been granted based on the finding that the transaction is unlikely to negatively impact competition in the market for commercial property.
Further, the acquisition will not elicit negative public interest concerns – the two key considerations during merger analysis by the Authority.
Heri Holdings, is a private limited liability company incorporated in Kenya.
As an investment and management company, Heri Holdings owns, finances, develops, and leases hospitality and commercial office real estate assets across the country.
Nova Academies is a private limited liability company incorporated in Kenya.
It leases the properties to Nova Pioneer Kenya Limited, a private school operator providing secondary education across Kenya through seven institutions.
The schools are Nova Pioneer Tatu City International, Nova Pioneer Athi River, Nova Pioneer Tatu City Primary, Nova Pioneer Tatu City Boys, Nova Pioneer Tatu City Girls, Nova Pioneer Eldoret Boys and Nova Pioneer Eldoret Girls.
The proposed transaction involves the acquisition of 100 percent shares of the issued share capital and loans of Nova Academies by Heri Holdings.
The competition watchdog said the transaction qualified as a merger within the meaning of sections 2 and 41 of the Competition Act No. 12 of 2010.
The Act stipulates that a merger, or takeover, may occur when an undertaking directly or indirectly acquires control over another business within Kenya.
“This may happen through, among others, purchase/lease of shares, exchange of shares, or vertical integration,” says CAK.
Further, the merging parties whose combined turnover or assets, whichever is higher, is
over Sh1 Billion are required to seek approval from the Authority prior to implementing the proposed transaction.
The authority said the transaction between Heri Holdings and Nova Academies met the threshold for mandatory notification and full analysis as provided in the Competition.
During merger analysis, and in order to determine the impact that a transaction will have on competition, the Authority identifies the relevant product market as well as the relevant geographic market
The relevant product market comprises products/services that are interchangeable or substitutable by the consumer due to their characteristics, prices and/or intended use. Based on this criterion, the relevant product market for the proposed transaction is the market for commercial property.
“Determination of the relevant geographic market involves interrogating the area in
which merging parties undertake the business and in which competition conditions are sufficiently similar. With regard to the proposed transaction, the parties real estate properties are located in the counties of Nairobi and Kiambu, ” says CAK.
The Authority determined the relevant geographic market is the counties of Nairobi and Kiambu.
“It is worth noting that the proposed transaction only involves some assets of the school (buildings, land and related infrastructure). The school shall continue to operate normally with no transfer of its programs, brand and related assets such as students,teachers and other employees, ” says CAK.
Real estate and construction sectors grew by 5.2% and 3.1%, respectively, in Q1 2023,
representing a 2.9% and 2.4% year-on-year growth, according to a report by Cytonn Investments. The report attributes this growth to increased property transaction volumes in the market coupled with the higher construction and expansion activities.
Some of the property development entities with a presence in Nairobi and Kiambu counties include; Hass Consult, Knight Frank, AMS Properties, Jumia Housing, Lloyd Masika, Cytonn, Cordison International Kenya Limited, Kenwind Holdings Limited and Elicio International.
Others are Kwacha Group of Companies Limited, Buttson Complex, Karuna Holdings, Magana Holdings Limited, Safari Park Holdings Limited, Anchor Holdings Limited, Al-Haq Holdings Limited, Canaaneast Company Limited, Erro Holdings Limited, Majestic Limited and Neighbors Holdings Limited among others.
