Old Mutual Private Equity buys 50% of Medhold

Published: 28 May 2018

OLD Mutual Private Equity (OMPE) has announced it acquired a 50% interest in South African healthcare firm Medhold Group Proprietary Limited (Medhold) for a yet undisclosed amount, pending approval by the Competition and Tariff Commission Zimbabwe (CTCZ).

Commenting on the announcement last week, investment principal at OMPE Chumani Kula said partnering with management teams they liked, trusted and admired in businesses with a clear and strong suite of competitive advantages, were part of their core pillars.

"These core pillars are firmly present in our investment in Medhold. We fully support Medhold's vision of improving the quality of life on the African continent and we see a meaningful opportunity to provide growth capital in order for the business to continue to expand its footprint nationally and across the rest of the African continent," he said.

Medhold will remain 50% owned by the management team.

The South African firm is a leading supplier of world-class medical devices and technology to the healthcare sector in southern Africa, including Zimbabwe.

Along with its initial investment, OMPE will provide additional growth capital to support the business's expansion plans locally and in the rest of Africa, to further scale and cement Medhold's position as a regional leader.

The partnership will also further enhance Medhold's Broad Based Black Economic Empowerment credentials through an improved scorecard.

According to sources close to the developments, the merger took place in South Africa and is a South African transaction.

The deal being a merger is due to the fact that OMPE will be partnering Medhold management in running the company and indirectly its subsidiaries since its acquired its 50% interest.

Due to OMPE having financial service offerings in Zimbabwe and Medhold through its subsidiaries having dealings in the country, the merger has to be assessed by the CTCZ to make sure there are no potential areas of conflict in terms of competition.

Under the Competition Act section 2, a merger is defined as "the direct or indirect acquisition or establishment of a controlling interest by one or more persons in the whole or part of the business of a competitor, supplier, customer or other person."

In that regard, the merger needs to be assessed as both companies have dealings locally even though the merger was done in South Africa.

The CTCZ was notified of the deal last month in a letter dated April 6, by South African law firm Cliffe Dekker Hofmeyr (CDH) who are representing the interested parties.

In the letter, CDH argues that while OMPE has operations in financial offerings in Zimbabwe since those operations are not in the health sector, therefore, there was no potential conflict with Medhold through its dealings locally which is why the merger should not be delayed.

Already, the Competition and Tariff Commission in South Africa has already proposed the merger be approved without conditions.

CTCZ chief executive officer, Ellen Ruparanganda, confirmed having received the notification of the merger saying the commission was still assessing it.
"I have heard about it, normally when companies apply for mergers they send us information for assessment. We are still assessing it and we are still in the preliminary stages. I cannot give you the answer, but they have notified us and we are yet to examine it," she said.

The Competition and Tariff Commission (CTC) is an autonomous statutory body established in 2001 through Competition Act [Chapter 14:28] with the dual mandate of implementing and enforcing Zimbabwe's competition policy and law; and executing the country's trade tariffs policy.
- newsday