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COMPETITION COMMISSION OF INDIA
Combination Registration No. C-2024/01/1104
12th March 2024
Notice under Section 6(2) of the Competition Act, 2002 given by Garagepreneurs
Internet Private Limited, Quadrillion Finance Private Limited, lntergalactory Foundry
Private Limited, RGVN (North-East) Microfinance Limited, North-East Small Finance
Bank Limited, Mr. Rajan Bajaj, Gunosy Inc., Gunosy Capital G.K., 3F Ventures, Blume
Ventures India Fund II, Blume Ventures Fund II, Blume Ventures (Opportunities)
Fund IIB and Insight Luxembourg XII S.a r.l.
CORAM:
Ms. Ravneet Kaur
Chairperson
Mr. Anil Agrawal
Member
Ms. Sweta Kakkad
Member
Mr. Deepak Anurag
Member
Order under Section 31(1) of the Competition Act, 2002
1. On 18th January 2024, the Competition Commission of India (Commission) received a notice
under Section 6(2) of the Competition Act, 2002 (Act), given by Garagepreneurs Internet
Private Limited (GIPL), Quadrillion Finance Private Limited (QFPL), lntergalactory
Foundry Private Limited (IFPL), RGVN (North-East) Microfinance Limited (RGVN),
North-East Small Finance Bank Limited (NESFB), Mr. Rajan Bajaj (RB), Gunosy Entities
viz., Gunosy Inc. (Gunosy) and Gunosy Capital G.K. (Gunosy Capital), Blume Funds viz.,
3F Ventures, Blume Ventures India Fund II, Blume Ventures Fund II and Blume Ventures
(Opportunities) Fund IIB and Insight Luxembourg XII S.a r.l. (Insight) [hereinafter GIPL,
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QFPL, IFPL, RGVN, NESFB, RB, Gunosy Entities, Blume Funds and Insight are
collectively referred to as the ‘Parties’].
2. The notice relates to the merger of the business operations of GIPL and NESFB under the
composite scheme of amalgamation under Sections 230 - 234 of the Companies Act, 2013
(Companies Act) (Proposed Scheme) approved by the board of directors of: (i) GIPL on 20th
October 2023, (ii) QFPL on 4th October 2023, (iii) IFPL on 23rd October 2023, (iv) RGVN
on 23rd June 2023, and NESFB on 26th June 2023 (Proposed Amalgamation). As submitted,
the Proposed Amalgamation will be carried out through a series of inter-connected steps
under the Proposed Scheme, as set out below:
i.
QFPL and IFPL will merge into GIPL (Step 1);
ii. GIPL (merged with QFPL and IFPL, hereinafter referred to as GIPL Combined) and
RGVN will each merge into NESFB, as the surviving entity (Merged Entity) (Step 2).
[For the purposes of Steps 1 and 2, GIPL, QFPL, IFPL, RGVN, and NESFB are
collectively referred to as Merging Parties]; and
iii. As consideration for Steps 1 and 2, the Merged Entity will issue shares to the existing
shareholders of GIPL and RGVN in the agreed exchange ratio (Step 3). The existing
shareholders of GIPL and RGVN that will receive shares in the Merged Entity as part of
Step 3 are collectively referred to as the Step 3 Investors. Of the Step 3 Investors, RB,
Gunosy Entities, Insight and Blume Funds are likely to receive as consideration more
than 5% shares along with, inter alia, right to nominate/appoint a director, subject to the
applicable laws and regulatory approvals.
3. As submitted, RB, the promoter of GIPL, either directly or indirectly, has also offered to
acquire certain outstanding shares of RGVN’s shareholders prior to/contemporaneously with
the Proposed Amalgamation (Proposed RB-RGVN Transaction).
4. Further, GIPL had made two capital infusions in NESFB in the months of October 2022 and
April 2023 and consequently acquired around 10% shareholding in NESFB (collectively,
Pre-Proposed Scheme Capital Infusions). Apart from the Pre-Proposed Scheme Capital
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Infusions, further fund infusions have been made and certain fund infusions are also proposed
to be made by GIPL in NESFB during the period of approval of Proposed Scheme and
consummation of the Proposed Amalgamation. As submitted, GIPL infused additional
capital in NESFB on 31st October 2023 and pursuant to the same, GIPL’s shareholding in
NESFB increased to 20.73% on a fully diluted basis (Third Capital Infusion). It is also
envisaged that GIPL may infuse additional funds in NESFB while the Merging Parties
continue to work towards securing the relevant regulatory approvals and thereafter the
consummation of the Proposed Amalgamation. For this purpose, GIPL has also executed a
letter agreement with NESFB dated 13 December 2023 (Letter Agreement), pursuant to
which GIPL has offered to infuse additional capital in NESFB, over the course of the next
four months (Proposed Additional Capital Infusions). Of the Proposed Additional Capital
Infusions, GIPL further infused additional capital in NESFB on 24th January 2024 pursuant
to which GIPL’s shareholding in NESFB increased from 20.73% to 29.17% (Fourth Capital
Infusion).
5. In terms of Regulations 14(3) of the Competition Commission of India (Procedure in regard
to the transaction of business related to combinations) Regulations, 2011 (Combination
Regulations), the Commission, vide letter dated 15th December 2023 (RFI), sought certain
information and clarifications regarding, inter alia, broader scheme of the issue of shares by
API, comparative rights of the Acquirers in API before and after the Proposed Combination,
etc. The Acquirers submitted their response on 5th January 2024 after seeking an extension
of time (Response to RFI). Apart from the Response to RFI, the Acquirers provided certain
additional information/clarifications on 19th January 2024 (Additional Submissions).
6. GIPL, promoted by RB, provides lending services and facilitates loans to borrowers on its
digital lending application (DLA) and offers “slice” PPI cards, UPI services as a Third-Party
Application Provider (TPAP), and is a master policyholder of its insurance partner’s
products through its platform. QFPL, a wholly owned subsidiary (WOS) of GIPL, is a
Systemically Important Non-Deposit Taking Non-Banking Financial Company (NBFC) and
is categorised as an Investment and Credit Company NBFC by the RBI (NBFC-SI-ICC). It
is primarily engaged in the business of providing financial services including credit facilities
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to individuals through the “slice” platform. IFPL, a WOS of GIPL, is engaged in the business
of developing software products that facilitate business and enable transactions in industries
including financial services, data, and communication services. As submitted, IFPL’s
services are almost entirely consumed captively by GIPL and QFPL for the purposes of their
lending services through the “slice” platform.
7. NESFB, a subsidiary of RGVN, is a private sector small finance bank (SFB) headquartered
in Guwahati, Assam. It has branches in the states of Arunachal Pradesh, Assam, Manipur,
Meghalaya, Mizoram, Nagaland, Tripura, Sikkim, and West Bengal. RGVN, the holding
company of NESFB, does not have any business operations of its own.
8. Gunosy Entities, Blume Funds, and Insight are existing shareholders of GIPL. As submitted,
none of the Gunosy Entities or Insight have any physical presence in India and none of the
Blume Funds offer any product(s)/services in India. However, they hold investments in some
entities having operations in India.
9. The Commission observed that the various transactions being envisaged centre around the
Proposed Amalgamation and accordingly the Proposed Amalgamation is only relevant for
competition assessment. In this regard, the Commission, as a first step, considered the
presence of GIPL (including its WOSs), NESFB (and RGVN), RB, affiliates of Gunosy
Entities, Blume Funds and Insight in India for identification of any horizontal overlaps or
vertical and/or complementary linkages. The Commission observed that the activities of the
aforesaid entities overlap in the broad areas of loans and lending services, digital payment
services, distribution of insurance products, distribution of mutual funds, and provision of
deposit-taking services. Certain existing/potential vertical linkages were also noted in terms
of the activities of banks offering UPI architecture and TPAP services and between provision
of core banking solutions and provision of banking services.
10. The aforesaid activities can be further segmented and sub-segmented. To illustrate, the loans
and lending services may be segmented as personal loans, home loans, loans against deposits,
MSME loans, etc.; digital payment services may be segmented as NEFT services, RTGS
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services, UPI services, etc.; distribution of insurance products as distribution of general
insurance products and life insurance products etc. However, for the reasons given in the
ensuing paragraphs, the Proposed Amalgamation is not likely to result in any appreciable
adverse effect on competition (AAEC) irrespective of the manner in which the relevant
market is delineated and accordingly, the Commission decides to leave precise delineation
of the relevant market(s) open.
11. At the outset, the Commission observed that the overlaps between the activities of the
NESFB and GIPL are minimal in qualitative terms. To illustrate, while NESFB and GIPL
both may be said to be offering ‘digital payments services’, NESFB offers debit cards as
opposed to GIPL’s digital “slice” pre-paid instrument (PPI) card and UPI services as a TPAP
service. The difference in activities indicates that though the activities may exhibit overlaps
in a broader market, the parties may not be the closest competitors of each other at the activity
level. Similarly, while both GIPL and NESFB may be said to be offering loans and lending
services at the broader level and unsecured personal loans at the narrower level, GIPL is
focused on the financial technology sector and does not offer typical/traditional banking
services in India and primarily GIPL is a lending service provider and houses a DLA to
facilitate loans between the lenders and borrowers while NESFB operates as a SFB and
provides traditional banking services. The difference is indicative of differences in the
respective customer base of GIPL and NESFB which also implies a lack of closeness of
competition between them.
12. Further, notwithstanding the aforesaid aspects, considering the presence of affiliates of the
Parties, the Commission took note of the presence of each of the Parties in each of the
aforesaid areas of activity and their segments/sub-segments and observed that the Parties
and/or their affiliates have a negligible presence as reflected in their actual volumes, turnover
and/or market share estimates.
13. Considering the aforesaid, the Commission observed that the Proposed Amalgamation is not
likely to change the competitive dynamics of any plausible relevant market in terms of both
the horizontal overlaps and vertical linkages noted above.
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14. Considering the material on record including the details provided in the Notice and the
assessment of the Proposed Combination based on the factors stated in Section 20(4) of the
Act, the Commission is of the opinion that the Proposed Amalgamation is not likely to have
any AAEC in India. Therefore, the Commission approves the Proposed Amalgamation under
Section 31(1) of the Act. However, this order is without prejudice to any proceeding that may
be initiated against GIPL under Section 43A of the Act in respect of Third and Fourth Capital
Infusions.
15. This order shall stand revoked if, at any time, the information provided by the Parties is found
to be incorrect.
16. The information provided by the Parties shall be treated as confidential in terms of and
subject to provisions of Section 57 of the Act.
17. The Secretary is directed to communicate to the Parties accordingly.
