CCP clears CDC investment in Naymat Collateral Management

ISLAMABAD: The Competition Commission of Pakistan has approved a proposed investment by the Central Depository Company of Pakistan Ltd in Naymat Collateral Management Company Ltd after completing a Phase-I review under the Competition Act, 2010.

According to the details reported, CDC filed a pre-merger application with the commission under Section 11 of the law, seeking permission to subscribe to additional ordinary shares in NCMCL. After carrying out a competition assessment, the regulator authorised the transaction, paving the way for CDC to increase its shareholding in the company.

Phase-I review completed

The commission examined the transaction within the framework of Pakistan’s competition law and assessed whether the proposed investment could affect market dynamics. Following that review, it concluded that the deal did not raise concerns significant enough to block the transaction.

In its assessment, the CCP identified the relevant market as collateral management and warehousing oversight services within Pakistan.

The commission determined that the proposed investment would not materially change the competitive landscape because CDC and NCMCL are active in different and unrelated lines of business. On that basis, it cleared the transaction.

Companies’ business profiles

CDC, which was established in 1993, is described as one of Pakistan’s major capital market institutions. Its operations include the electronic custody of securities, facilitation of settlement and other related depository services.

NCMCL, incorporated in 2020, operates as a collateral management company. Its role includes warehouse oversight as well as verification and reporting services for commodities that are held as collateral.

The approval means CDC can proceed with the planned subscription of additional ordinary shares in NCMCL. The decision follows the commission’s finding that the transaction is unlikely to significantly alter competition conditions in the market it reviewed.

The development is part of the CCP’s merger review process under the Competition Act, 2010, under which parties are required to seek regulatory clearance for certain transactions before completion. In this case, the commission’s Phase-I review resulted in approval of the proposed investment after it found no substantial competition issue arising from the deal.

The reported decision specifically rests on the regulator’s view that the two entities do not compete in the same business segment. As a result, the commission concluded that CDC’s acquisition of additional shares in NCMCL would not significantly affect competition in Pakistan’s market for collateral management and warehousing oversight services.