Asante Capital EPZ limited has been hit by a Ksh 549,019 penalty from the Competition Authority of Kenya after it found that the firm had merged with Moringa entities without seeking approvals.
Asante, an agroforestry company operating in Coastal Kenya, is engaged in the growth of eucalyptus, ginger and drumstick trees. On the other hand, Moringa entities, Moringa SCA and Moringa Mauritius Africa are impact investment funds investing in agroforestry businesses with the objective of scaling their social and environmental impact.
According to CAK, the two sought clarifications in the years 2017 and 2018. However, with the first, CAK said the proposed acquisition of 44.2% shareholding in Asante by the Moringa entities ‘Would not lead to the acquisition of control in Asante and therefore, the first tranche of investment did not require prior authorization’.
However, in 2018, following the third trench in investment, CAK said, “Moringa entities had resulted in a change of control and therefore qualified as a merger within the meaning of section 2 and 41 of the Act.”
“The Authority advised the parties that the second tranche of investment was a notifiable transaction. Moringa Entities’ stake in Asante had resulted in a change of control and therefore qualified as a merger within the meaning of Section 2 and 41 of the Act.”
Section 42(2) of the Competition Act states that: “No person, either individually or jointly or in concert with any person, may implement a proposed merger to which this part applies unless this merger is approved by the Authority.”
As a result of the penalty imposed, CAK has ordered the two to initiate steps to regularise the transaction.
“The Authority acknowledged the fact that the parties reported and that they were desirous of settling the matter administratively,” said CA in a statement on the acquisition of a shareholding in Asante Capital by Moringa entities.
