The Competition Authority of Kenya has approved Heri Holdings Limited’s proposed acquisition of 100% of Nova Academies Tatu City Property Limited unconditionally, the authority announced Tuesday.
The regulator said the transaction is unlikely to negatively impact competition in the commercial property market or raise public interest concerns – the two key considerations during its merger analysis.
Heri Holdings, a private Kenyan company, owns, finances, develops and leases hospitality and commercial real estate across the country. Nova Academies is also a private Kenyan company that leases properties to Nova Pioneer Kenya Limited, which operates seven private secondary schools in Kenya.
The deal involves Heri Holdings acquiring 100% of Nova Academies’ shares and loans, qualifying it as a merger under Kenya’s Competition Act, the authority said. The act requires approval for mergers where the combined turnover or assets of the companies, whichever is higher, exceeds 1 billion Kenyan shillings ($8.3 million).
The authority determined the relevant product market as commercial property and the relevant geographic market as Nairobi and Kiambu counties, where the companies’ real estate is located. It noted the deal involves only some of the Nova Pioneer schools’ assets and the schools will continue operating normally.
Kenya’s real estate and construction sectors grew 5.2% and 3.1% in the first quarter of 2023, representing nearly 3% year-over-year growth in both, according to Cytonn Investments. Cytonn attributed the expansion to increased property transactions and construction activity.
The authority said the merged entity will have an “insignificant market share” in commercial property compared to larger players like Hass Consult, Knight Frank and others with greater market visibility.
“Premised on this, the proposed transaction is unlikely to lead to a substantial lessening of competition in the market for commercial property in the counties of Nairobi and Kiambu,” the regulator said.
It also concluded the deal is unlikely to negatively impact public interest because the target company has no employees and is not actively trading.
The unconditional approval was granted Tuesday based on these findings that competition and public concerns would not be harmed, the authority said.
