(Ecofin Agency) - In December 2021, South Africa’s Ethos Private Equity announced it would divest from Neopak. This plan is being stymied by the national Competition Commission.

Regulatory constraints are hindering the divestment of Ethos Private Equity, a South African private equity firm, from Neopak Holdings, another South African firm operating in the packaging industry. According to the local Competition Commission, the transaction announced in late December 2021 cannot proceed, as it would grant Corruseal Group, the proposed buyer, a monopoly over the packaging sector. 

“ The Commission found that Neopak is considered an important independent (non-integrated) supplier of recycled containerboard paper to firms that manufacture packaging products. The merger would thus result in the loss of the Neopak as a non-integrated firm,” explained the competition authority whose approval is required for the success of the divestment plan. 

Neopak and Corruseal are both active in the recycled paper value chain. According to the two firms’ websites, Corruseal's South African operations include the collection and recycling of waste paper, the manufacture of paperboard, corrugated sheets, and packaging products using recycled paper.

Ethos Private Equity acquired Neopak in 2015 for ZAR1.53 billion (about US$90 million). According to some estimates, the current value of Neopak is twice that amount.