Shriram Ownership Trust Acquisition of SIHL Shares

COMPETITION COMMISSION OF INDIA (Combination Registration No. C-2024/02/1110)

19th March 2024

Notice under Section 6(2) of the Competition Act, 2002 given by Shriram Ownership Trust

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 $9^{\text{th}}$ February 2024, the Competition Commission of India (Commission) received a Notice under Section 6(2) of the Competition Act, 2002 (Act) given by Shriram Ownership Trust (SOT/Acquirer) for the proposed acquisition of 9.44% and 20% stake of Shriram Investment Holdings Private Limited (SIHL/Target) by SOT from APRN Enterprises Private Limited (APRN) and Piramal Enterprises Limited (PEL) [Hereinafter, the Acquirer and Target are collectively referred to as 'Parties'].

2. The notice has been filed pursuant to the following documents – (i) Share Purchase Agreement dated $27^{\text{th}}$ January 2024 entered between SOT, PEL and SIHL, and (ii) Share Purchase Agreement dated $29^{\text{th}}$ January 2024 entered between SOT, APRN and SIHL.

3. The proposed combination envisages, acquisition of 9.44% and 20% stake in the Target, by SOT from APRN and PEL$^1$, respectively (Proposed Combination). Through the Proposed Combination, the shareholding of SOT in the Target, will increase from existing 6.68% to 36.12% and the shareholding of the Shriram Group in the Target through SOT and Shriram Capital Private Limited (SCPL) will increase from 70.56% to 100%.

4. 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 $16^{\text{th}}$ February 2024 (RFI), sought certain information and clarifications regarding, inter alia, the activities of the Parties. The response to the same was received on $21^{\text{st}}$ February 2024. The Parties also made certain additional submissions on $26^{\text{th}}$ February 2024.

5. Acquirer/SOT and Target/SIHL are both part of the 'Shriram Group' of companies. The details of shareholding and activities of each of the Parties are as under:

• (i) SOT, is a private discretionary trust. The beneficiaries of the Trust are the past, present and future senior management of Shriram Group. It holds shares in the SCPL and shares of other companies in Shriram Group.
• (ii) SIHL is held, inter alia, by Shriram Group. Shriram Group through SOT and SCPL are already holding 70.56% of SIHL. SIHL is the unregistered core investment company with a standalone asset size of Rs. 3,976 crores and turnover of Rs. 1,881 crores as on $31^{\text{st}}$ March 2023. SIHL is not having any business of its own except investment in various companies, most of which are 100% subsidiaries of SIHL.

6. As submitted, SOT has no direct or indirect shareholding through its affiliates engaged in any activity which can be considered horizontally, vertically or complementarily linked to various business activities of the Target except in the activities related to Insurance Broking and Distribution Business of Insurance Products undertaken by the two companies of

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$^1$ As submitted, these two shareholders are minority shareholders with no additional rights in Target/SIHL other than the rights available as a shareholder in proportion to their shareholding.

Shriram Group, namely, Shriram Finance Limited (SFL) and Shriram Fortune Solutions Limited (SFSL).

7. Accordingly, the Commission assessed the Proposed Combination in terms of horizontal and vertical linkages within the value chain of Insurance Broking and Distribution Business of Insurance Products. However, for the reasons given in ensuing paragraph, the Proposed Combination is not likely to result in any appreciable adverse effect on competition in any of the plausible markets that could be delineated, and accordingly, the question of the exact delineation of relevant market(s) for assessment of aforesaid vertical linkages is left open.

8. Based on the submission, it is observed that the combined market share of Parties in the Insurance Broking segment and in the segments of Distribution of Insurance Products as well as narrower segment of Distribution of General Insurance and Life Insurance Products is less than 1 percent, which is insignificant to cause any change in competition dynamics.

9. 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 any appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act.

10. The order may be revoked if, at any time, the information provided by the Parties is found to be incorrect.

11. The Secretary is directed to communicate to the Parties accordingly.