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Southern Africa Venture Capital and Private Equity (“SAVCA”) director Langa Madonko unpacked the adverse ruling handed down by the Competition Commission on Grand Parade’s sale of Burger King to private equity buyer Emerging Capital Partners (“ECP”). The transaction was blocked due to concerns related to the BEE credentials of the the private equity fund. Grand Parade, listed on the local bourse, had obtained shareholder approval for the sale of the fast-food outlet. The ruling was not blocked on the basis of anti-competitive practices. All things considered, Grande Parade shareholders can feel aggrieved. This is also a concerning precedent going forward for similar type transactions. – Justin Rowe-Roberts
Langa Madonko on whether private equity buyer ECP are members of SAVCA:
ECP are members of SAVCA and have been so for a while. They are an Africa centric fund and South Africa is one of the territories they look to harness opportunities in. They invest sizeable capital to find opportunities that they can scale and grow, as is the model for private equity.
On the Competition Commission blocking the deal based on BEE credentials:
You never anticipate the Competition Commission will unduly decline a transaction. We are particularly concerned on the basis of what does this mean for, amongst other things, transformation. What does it mean of exits for local investors going forward – exits to international firms seem off the table.
On the engagements by SAVCA to its members and the Competition Commission :
We’ve tried to engage with them as broadly and widely as possible. We’ve engaged with international investors as well our own members. We’ve also tried to engage with the Competition Commission. As SAVCA, we are very much pro the agenda of transformation. We understand the historical nuances which surround South Africa, where we come from and why it’s important. The biggest challenge we face here is that we have an outcome but we don’t understand how the Competition Commission reached that particular ruling.
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