Consolidated Infrastructure Group’s merger with Fairfax will ease liquidity struggles

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The Competition Tribunal approved a merger for Consolidated Infrastructure Group (CIG) with Canadian based investment firm, Fairfax Africa Holdings. The move will not only improve CIG’s liquidity, but also boost the company’s efforts to turn around struggling power infrastructure subsidiary, Consolidated Power Projects Group (Conco), which provides power and extraction services.

Raoul Gamsu, CIG’s CEO said the company had struggled in the South African market because of the dearth of investment by state owned companies. He revealed local trading conditions had been catastrophic and the company needed more capital to entrench itself in the international market.

CIG noted that its transaction with Fairfax Africa Holdings was part of steps to review and evaluate its long term funding requirements and capital structure. Fairfax Africa Holdings, which has a market capitalisation of $660 million, also seeks to ensure long term capital appreciation by investing in public and private equity securities and debt instruments in Africa.

The Competition Commission assesses mergers before referring them to the tribunal for decisions. It said it had considered the activities between CIG and Fairfax Africa Holdings “and found that the proposed transaction does not result in a horizontal overlap because the acquiring group does not provide any products or services that are substitutable to the target firm’s products and services”.

The Commission also noted that the proposed transaction does not raise any employment concerns. The merger will not substantially prevent or lessen competition in any market in South Africa.

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