Allowed

1. Kopvoorn B.v., 2. Moss Investments Limited, 3. Infinity Partners and 4. Defati Investments

CCI8 Aug 2023C-2023/06/1039

Case brief

AI extract

What is this about?

The Competition Commission of India assessed a proposed acquisition of HDFC Credila by a consortium of investors. After reviewing market overlaps in education loans and life insurance distribution, the Commission found no appreciable adverse effect on competition and approved the combination.

What did the court decide?

The Commission approves the proposed combination under Section 31(1) of the Act.

1. Kopvoorn B.v., 2. Moss Investments Limited, 3. Infinity… — Company and Corporate | CCI (2023)

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COMPETITION COMMISSION OF INDIA

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Combination Registration No.C-2023/06/1039

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8^th August 2023

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Notice under Section 6(2) of the Competition Act, 2002 jointly filed by Kopvoorn B.V., Moss Investments Limited, Infinity Partners and Defati Investments Holding B.V.

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CORAM:

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Ms. Ravneet Kaur Chairperson

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Ms. Sangeeta Verma Member

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Mr. Bhagwant Singh Bishnoi Member

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Order under Section 31(1) of the Competition Act, 2002

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On 27^th June 2023, the Competition Commission of India ( Commission ) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 ( Act ), filed by Kopvoorn B.V. ( BPEA EQT Acquirer ), Moss Investments Limited ( Moss ), Infinity Partners ( Infinity ) and Defati Investments Holding B.V. ( Defati ). (Hereinafter, Moss, Infinity and Defati collectively referred to as the ChrysCapital Acquirers . BPEA EQT Acquirer and the ChrysCapital Acquirers are collectively referred to as Acquirers .)

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The notice has been given pursuant to the investment agreement dated 19^th June 2023 entered into amongst Housing Development Finance Corporation Limited ( HDFC Limited ), HDFC Bank Limited ( HDFC Bank ), HDFC Credila Financial

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Combination Registration No. C-2023/06/1039

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Services Limited ( HDFC Credila/Target ), BPEA EQT Acquirer and ChrysCapital Acquirers ( Investment Agreement ). Further, HDFC Limited, HDFC Bank, BPEA EQT Acquirer, ChrysCapital Acquirers and HDFC Credila have entered into a Shareholders Agreement dated 19^th June 2023 ( SHA ). Subsequently, a letter agreement dated 5^th July 2023 has also been executed by and between HDFC Bank, HDFC Credila, the BPEA EQT Acquirer and the ChrysCapital Acquirers ( Letter Agreement ). (Hereinafter, the Acquirers and HDFC Credila are collectively referred to as Parties ).

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The proposed combination will be implemented by way of an acquisition by the Acquirers, collectively, of equity shares comprising approximately 90% of the shareholding and voting rights of HDFC Credila by way of purchase of equity shares from HDFC Bank as well as subscription to equity shares of HDFC Credila in accordance with the terms of the Investment Agreement and the Letter Agreement ( Proposed Combination ).

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In terms of Regulation 14 of Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations), the Commission vide communication dated 10^th July 2023, sought certain information(s)/clarification(s), inter alia, relating to the activities of the Parties and the response to the same was received on 22^nd July 2023.

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Description of the Parties

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BPEA EQT Acquirer - The BPEA EQT Acquirer is a private limited liability company incorporated under the laws of the Netherlands. The BPEA EQT Acquirer is a newly incorporated entity which has been set up as a holding company for the purposes of the Proposed Combination. It is not engaged in any business activity in India and neither does it have a physical presence in India.

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Combination Registration No. C-2023/06/1039

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EQT Group - The BPEA EQT Acquirer is ultimately owned by entities forming the investment fund BPEA Private Equity Fund VIII ( BPEA Fund VIII ), which is an EQT investment fund and is controlled, managed and advised by entities affiliated with EQT AB. The BPEA EQT Acquirer is accordingly part of the EQT group of investment funds, which together with its subsidiaries and funds is a global investment organisation. Further, EQT including its subsidiaries and funds are referred to as the EQT Funds . EQT Funds including funds branded by BPEA EQT, make investments in various sectors, both in India and overseas.

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7. ChrysCapital Acquirers:

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(i) Moss : Moss is a company incorporated under the laws of Mauritius. It is an investment vehicle, wholly owned by ChrysCapital IX, LLC. Moss is a special purpose vehicle and does not have any investments or physical presence or offers any other products/services in India.

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(ii) Defati : Defati is a company incorporated under the laws of the Netherlands. It is an investment vehicle, which invests alongside ChrysCapital IX, LLC. The ultimate parent entity of Defati is Stichting Depositary APG Private Equity Pool 2022-2023 ( APG ). Defati is managed and controlled by CMC, which is also the investment manager of ChrysCapital IX, LLC. CMC controls the management and affairs of Defati, including decisions pertaining to investments made by Defati. Further, it is submitted that Defati does not provide or offer any other products/services in India.

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(iii) Infinity : Infinity is a partnership firm set up under the laws of India. It is an investment vehicle wherein the partners of Infinity are either: (a) partners or employees of ChrysCapital Advisors, LLP; or (b) full-time consultants of ChrysCapital IX. ChrysCapital Advisors, LLP is part of the ChrysCapital group and Infinity is part of the ChrysCapital group. Further, it is stated that Infinity does not provide or offer any other products/services in India.

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Combination Registration No. C-2023/06/1039

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ChrysCapital Group- ChrysCapital IX, LLC is a private equity fund, registered in Mauritius, which is set up by the ChrysCapital group ( ChrysCapital ). ChrysCapital IX, LLC is the ninth fund of ChrysCapital. The ChrysCapital funds are focused on making investments in sectors such as business services, consumer goods and services (including ancillary services), financial services, healthcare and pharmaceuticals.

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HDFC Credila - HDFC Credila is a public limited company incorporated in India. It is a systemically important non-deposit taking non-banking financial company ( NBFC-NDSI ) registered with the Reserve Bank of India. It is currently a wholly owned subsidiary of HDFC Bank and a part of the HDFC group, which collectively refers to HDFC Bank as the ultimate holding company and its subsidiaries, associate entities and joint venture entities which together are a group of entities primarily active in the provision of financial services in India. HDFC Credila is primarily engaged in the business of providing education loans to Indians who wish to pursue higher education both in India and overseas; it does not engage in the provision of any other types of loans other than education loans. HDFC Credila does not have a presence outside India.

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Identification of Overlaps:

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It is stated in the notice that the BPEA EQT Acquirer/its group entities (starting from its ultimate parent entity i.e., EQT AB)/EQT Portfolio Companies with presence in, and/or generating revenue from India, do not have actual or potential horizontal overlaps or vertical/complementary relationships with the primary business activity of HDFC Credila. Further, APG , the ultimate parent entity of Defati, directly or indirectly through its affiliates, is neither engaged in any business that overlaps with the business of HDFC Credila nor engaged in any business that is vertically or complementarily linked to the business of HDFC Credila, in any of the relevant markets. Similarly, CMC directly or indirectly through its affiliates, neither has investments in any business that overlaps with the business of HDFC Credila

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Combination Registration No. C-2023/06/1039

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nor in any business that is vertically or complementarily linked to the business of HDFC Credila, in any of the relevant markets.

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Based on an overlap assessment conducted between the business activities of the Target and the ChrysCapital Acquirers/ their group entities (starting from their ultimate parent entity i.e., ChrysCapital) and their portfolio entities having a presence in and / or generating revenue from India, the Parties have submitted that:

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a. an Affiliate of ChrysCapital i.e., Varthana Finance Private Limited ( Varthana ) is engaged in the market for provision of education loans. Accordingly, Varthana has a horizontal overlap with HDFC Credila in the ‘ market for provision of education loans in India ’.

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b. a portfolio entity of ChrysCapital, i.e., Hero Fincorp Limited ( HFL ) is involved in the market for distribution of life insurance products and services in India. Accordingly, HFL has a horizontal overlap with HDFC Credila in the ‘ market for distribution/referral of life insurance products and services in India ’.

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In addition to above, the BPEA EQT Acquirer has submitted that the EQT Funds have a portfolio company i.e., Mambu, which is a software-as-a-service banking platform and provides ancillary services to the banking and financial services sector. However, there have never been any supply arrangements between HDFC Credila and Mambu till date. Further, it is submitted that both the EQT Funds and ChrysCapital have investments in certain entities that are engaged in the provision of IT/ITeS services in India. However, all these entities provide sector-agnostic IT/ITeS services and are not specifically targeted towards the banking and financial services sector. Accordingly, it is submitted that neither the Acquirers nor their group entities (including its ultimate parent entity) nor any of their portfolio entities with presence in and/or generating revenue from India, whether directly or by way of sales have any actual or potential vertical/complementary relationships with the business activities of HDFC Credila in the provision of IT/ITeS services in India.

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Combination Registration No. C-2023/06/1039

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The Commission decided to assess the Proposed Combination in the segments identified by the Parties. However, exact delineation of the relevant market has been left open, as the material available on record does not suggest that the Proposed Combination is likely to cause any competition concerns in India.

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Assessment of the Proposed Combination

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Based on the submissions of the Acquirers, it is noted that the combined market share of HDFC Credila and Varthana in the market for provision of education loans in India is in the range of [10-15]% and [0-5]% in terms of value and volume, respectively in F.Y. 2022-23. Also, there are other players present in the market such as State Bank of India, Canara Bank, Union Bank of India, Bank of Baroda, Indian Overseas Bank and Central Bank of India.

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Further, based on the submissions of the Acquirers, it is noted that the combined market shares of HDFC Credila and HFL in the market for distribution/referral of life insurance products and services in India is in the range of [0-5]%, both in terms of value and volume in F.Y. 2021-22. Also, there are other players present in the market such as State Bank of India, Punjab National Bank, ICICI Bank, Bank of Baroda, Union Bank of India, ICICI Securities and Axis Bank.

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Considering the material on record, including the details provided in the notice given under sub-section (2) of Section 6 of the Act and the assessment of the Proposed Combination on the basis of factors stated in sub-section (4) of Section 20 of the Act, the Commission is of the opinion that Proposed Combination is not likely to have an appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

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