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COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/06/1159
20th August 2024
Notice under Section 6(2) of the Competition Act, 2002 given by IndusInd International Holdings Limited and IIHL AMC Holdings Limited
CORAM:
Ms. Ravneet Kaur Chairperson
Ms. Sweta Kakkad Member
Mr. Deepak Anurag Member
Order under Section 31(1) of the Competition Act, 2002
On 13th June 2024, the Competition Commission of India (Commission) received a Notice under Section 6(2) of the Competition Act, 2002 (Act), given by IndusInd International Holdings Limited (IIHL) and IIHL AMC Holdings Limited (IIHL AMC) (collectively, IIHL/Acquirer).
The proposed combination involves acquisition by IIHL of 60% shareholding in each of Invesco Asset Management (India) Private Limited (Invesco AMC) and Invesco Trustee Private Limited (Invesco Trustee) (collectively, Invesco) (Proposed Combination). The Notice was filed with the Commission pursuant to execution of a Share Purchase Agreement (SPA) by and between, inter alia, IIHL, Invesco AMC, Invesco Trustee and Invesco Limited and a Shareholders’ Agreement (SHA) by and between, inter alia, IIHL, Invesco AMC and Invesco Trustee, each dated 9th April 2024. The SPA allows IIHL to designate a wholly owned and controlled subsidiary outside India to purchase and hold shares proposed to be acquired via the Proposed Combination for and on behalf of IIHL, and in exercise of the said right, IIHL will be holding shareholding in Invesco through IIHL AMC.
In terms of Regulation 14(3) of the Competition Commission of India (Procedure in regard to the transaction of business related to combinations) Regulations, 2011 (Combination Regulations), vide letter dated 5th July 2024 (RFI), certain information and clarifications were sought from IIHL. IIHL submitted its response on 29th July 2024 after seeking extension of time (Response 1). As the Response 1 was found to be incomplete, another letter was issued to IIHL, on 30th July 2024, in continuation of RFI, seeking requisite information and clarifications. IIHL submitted its response to the same on 5th August 2024 after seeking extension of time (Response 2) (Response 1 and Response 2 collectively constitute ‘Response to RFI’). The Response to RFI was followed by additional voluntary submissions made by IIHL on 9th August 2024 (Voluntary Submissions).
IIHL is a Global Business License licensee company incorporated in the Republic of Mauritius. The principal activity of IIHL is investment holding whereby IIHL holds shares in different companies spread across sectors. IIHL AMC is a wholly owned and controlled subsidiary of IIHL, incorporated for the specific purpose of the Proposed Combination.
Invesco Trustee and Invesco AMC are the trustee company and asset management company of Invesco Mutual Fund which is registered with SEBI as a mutual fund under the provision of SEBI (Mutual Funds) Regulations, 1996. Invesco AMC is also registered as a portfolio manager under the SEBI (Portfolio Managers) Regulations, 2020 (PM Regulations).
Based on the information given in the Notice, Response to RFI and Voluntary Submissions, the area of activities of Invesco were narrowed down to the provision of mutual funds and provision of discretionary portfolio management services (PMS). Considering the same, the relevant affiliates of IIHL for the purposes of mapping of overlaps, vertical/complementary linkages were identified as IndusInd Bank Limited1 (IndusInd Bank) which is engaged in, inter alia, the activities of distribution of mutual funds and provision of referral services for PMS; and Reliance Capital Limited (Reliance Capital)2 which is engaged, inter alia, in provision of PMS3. Accordingly, the Proposed Combination results in horizontal overlaps in the area of PMS in India (considering the presence of Invesco and Reliance Capital); and vertical overlaps resulting from Invesco’s presence in provision of mutual funds in India and IndusInd Bank’s presence in the activity of distribution of mutual funds in India and Invesco’s and Reliance Capital’s presence in the activity of PMS in India and IndusInd Bank’s presence in the activity of referral services for PMS in India. The Proposed Combination has thus been assessed accordingly.
As regards the horizontal overlaps in the activity of PMS, the Commission considered the presence of Invesco and RWML in terms of their assets under management (AUMs) and client base and observed that the combined presence is insignificant to cause any change in competition dynamics in the PMS segment and that the market segment of PMS is observed to be characterized by presence of other significant competitors. Further, the insignificant combined presence in the activity of PMS coupled with equally insignificant presence of IndusInd Bank in the segment of referrals for PMS implies that the resulting vertical linkage is not likely to confer any ability or create any incentive to the parties to engage in any foreclosure strategies post the Proposed Combination.
As regards the vertical linkage in form of provision of mutual funds and distribution of mutual funds in India, the Commission considered the respective presence of Invesco and IndusInd Bank and observed that Invesco accounts for less than 2% of the market for provision of mutual funds in India and IndusInd Bank accounts for less than 1% of the market for distribution of mutual funds in India. Both the market segments are observed to be characterized by presence of other significant competitors. Accordingly, given the insignificant presence of Invesco and IIHL in their respective activity segments, the aforesaid vertical linkage is not likely to confer any ability or create any incentive to the parties to engage in any foreclosure strategies post the Proposed Combination.
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 Combination is not likely to have appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.
This order shall stand revoked if, at any time, the information provided by the Acquirer is found to be incorrect.
The information provided by the Acquirer shall be treated as confidential in terms of and subject to provisions of Section 57 of the Act.
The Secretary is directed to communicate to the Acquirer accordingly.
1 IIHL holds around 11% shareholding in IndusInd Bank 2 As submitted, IIHL is in process of acquiring Reliance Capital pursuant to the corporate insolvency resolution process (CIRP) of Reliance Capital. The Commission observed that the acquisition of Reliance Capital by IIHL pursuant to CIRP was notified under Section 6(2) of the Act and was assigned Comb. Regn. No. C-2023/12/1091 and was approved under Section 31(1) of the Act, vide order dated 27th December 2023. 3 One of the subsidiaries of Reliance Capital viz., Reliance Wealth Management Limited (RWML) is engaged in provision of PMS.
