PRETORIA – GroCapital Holdings has leaped to the defence of the Prudential Authority (PA) at the Reserve Bank over allegations of matching-making during its acquisition of the SA Bank of Athens.
This follows a Business Report article last week that questioned the authority's impartiality in advising GroCapital to include the Public Investment Corporation (PIC) as part of the acquiring group to increase its prospects of obtaining approval for the transaction.
The Competition Tribunal last year unconditionally approved the acquisition of the SA Bank of Athens by GroCapital Holdings, which was then jointly controlled by Afgri Holdings and Fairfax Africa Investment.
However, the tribunal last month considered the transaction again and approved it, with conditions, with the PIC now added as a 35 percent shareholder in GroCapital.
On Friday GroCapital distanced itself from the claims.
“We further assert that the contents of the article are conjecture and that the inferences, conclusions and comments made by the author regarding the independence of the PA are those of the author only and not those of GroCapital Holdings and/or its shareholders,” the group said.
“GroCapital Holdings categorically denies that the PA introduced the PIC as a prospective shareholder to GroCapital Holdings or suggested, inferred or implied that if the PIC was included as a shareholder, the acquisition would stand a better chance of being approved. The PIC has in fact been a substantial shareholder of Afgri since 2014.
“We are of the view that the author quoted selectively, and out of context, from the records of the Competition Commission (sic) Tribunal hearing.”
GroCapital said it agreed with comments made by the PA in the article.
The PA said: “We can categorically state that these allegations of ‘match-making’ or requiring applicants, including those related to the acquisition of SA Bank of Athens shareholding, to include the PIC as a party to the acquisition of shareholding of banks, are not true.”
Business Report attended the tribunal hearing and is also in possession of a transcript of the hearing.
Andries le Grange, the legal representative for the PIC and GroCapital, confirmed at a the hearing that “the Reserve Bank required (the) PIC to come into the structure”.
Billy Mabatamela, appearing for the Competition Commission, told the tribunal: “The commission did receive a letter from the merging parties, indicating that they were advised by basically the South African Reserve Bank that including the PIC as part of the acquiring group, that is GroCapital, will basically increase their prospects of obtaining the South African (Reserve) Bank’s approval for the transaction to proceed.
“Based on that particular advice (by the) chairperson, the merging parties basically invited the PIC to be part of GroCapital.”
Norman Manoim, chairperson of the tribunal panel, asked: “So, the requirement that the PIC be a shareholder, is that a legal requirement of the regulator? What is – or was this just a suggestion and…?”
A Ms Simpson, who with Le Grange was representing the PIC and GroCapital, responded: “It was a suggestion but the approval (by the Reserve Bank and Minister of Finance) has been granted on the basis that they (PIC) are a shareholder, so that is the basis on which it has been granted.”
Manoim responded: “So, it was a conditional approval on this deal being done, by the regulator?”
Herkie Bloem from Afgri responded: “It wasn't a specific condition by the Reserve Bank. They strongly recommended that we include (the) PIC as a shareholder in the transaction. So, when we submitted our application to the Reserve Bank, we have included the PIC as a potential shareholder.
“They've granted us the approval back in April this year, that we may proceed with the acquisition, but subject to the Competition Commission adding its final approval to this process,” he said.
Andiswa Ndoni, a member of the tribunal panel, asked Bloem if he believed the transaction would have been approved if GroCapital had not given equity to the PIC and “brought in somebody else”.
Bloem said: “Yes, I think it would still have been approved as Fairfax is definitely a shareholder of substance.”