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The Competition Commission of India approves the combination involving Tasmania Midco, LLC, Nevado Investments Pte. Ltd., and Thoughtworks Holding, Inc. under Section 31(1) of the Competition Act, 2002. The acquisition entails an incremental stake purchase through merger, rollover arrangement, and co-investment, resulting in the AP Funds and Temasek holding the entire equity shareholding in the target. The commission determines that the proposed combination does not cause an appreciable adverse effect on competition in India due to minimal combined market shares and the presence of alternative market players.
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COMPETITION COMMISSION OF INDIA Combination Registration No.C-2024/09/1186
29th October 2024
Notice under Section 6(2) of the Competition Act, 2002 filed by Tasmania Midco, LLC and Nevado Investments Pte. Ltd.
CORAM:
Ms. Ravneet Kaur Chairperson
Mr. Anil Agrawal Member
Ms. Sweta Kakkad Member
Order under Section 31(1) of the Competition Act, 2002
On 17th September 2024, the Competition Commission of India (Commission) received a notice under sub-section (2) of Section 6 of the Competition Act, 2002 (Act) filed by Tasmania Midco, LLC (Acquirer) and Nevado Investments Pte. Ltd. (Nevado) [Hereinafter, Acquirer and Nevado are collectively referred to as Acquirers].
The notice has been filed pursuant to (a) the Agreement and Plan of Merger, inter alia, entered into amongst the Acquirer, Tasmania Merger Sub (Merger Sub) and Thoughtworks Holding, Inc. (Target) dated 5th August 2024 (Merger Agreement); (b) Rollover Agreement, inter alia, entered into amongst Turing Equity Co II L.P. (Turing) and Tasmania Parent, Inc. (Tasmania Topco), and its subsidiaries dated 5th August 2024 (Rollover Arrangement); and (c) an Equity Commitment Letter (ECL) dated 5th August 2024 executed by Nevado and the Acquirer whereby Nevado will invest in the Acquirer so that the combined beneficial interest of Temasek, the ultimate parent entity of Nevado, in the Target will be ~10% (Co-investment).
The proposed combination entails an acquisition of incremental stake in the Target, by Apax Partners LLP (AP) (the AP Funds) (through the Acquirer) and Temasek Holdings (Private) Limited (Temasek) (through Nevado). Currently, AP Funds and Temasek hold ~52% and ~4% shareholding in the Target, respectively. Post the consummation of the proposed combination the AP Funds and Temasek will indirectly hold ~90% and ~10% equity shareholding in the Target, respectively, with AP Funds indirectly holding 100% of the voting rights and Temasek indirectly holding ~10% beneficial interest as a passive investor and no voting rights [Hereinafter, referred to as the Proposed Combination]. Thus, by way of the Merger, Rollover Arrangement, and Co-Investment, the AP Funds (through the Acquirer) and Temasek (through Nevado) will hold 100% equity shareholding in the Target [Hereinafter, the Acquirer/AP, Nevado/Temasek and the Target are collectively referred to as the Parties]. Further, it is submitted that currently the AP Funds have designated 2 out of 9 board of directors on the board of the Target and post the consummation of the proposed combination, AP Funds will have the right to appoint the entire board of directors of the Target.
In terms of Regulation 14 of Competition Commission of India (Combinations) Regulations, 2024, letters dated 25th September 2024 and 17th October 2024 were issued to the Acquirer seeking certain information(s)/ clarification(s), inter alia, relating to the activities of the Parties and the responses to the same were received on 08th October 2024 and 18th October 2024, respectively.
The Acquirer, is a special purpose vehicle indirectly wholly-owned by the AP Funds. It is an indirect wholly owned subsidiary of Tasmania Topco, a Delaware corporation. It is controlled by investment funds advised by AP and operates solely as an investment holding company. It does not have any business operations other than holding investments. Further, it is neither active in India nor has any planned business activities in India. Merger Sub, a Delaware corporation, is a wholly owned subsidiary of the Acquirer.
The Acquirer is ultimately controlled by AP, a limited liability partnership incorporated under the laws of United Kingdom and parent of several entities which provide investment advisory services to private equity funds investing in a range of industry sectors. In India, AP is present in the provision of IT and IT enabled services (ITeS) through certain portfolio companies of its affiliates. At a narrow level, AP is engaged in the business of provision of consulting services; application implementation and managed services; infrastructure implementation and managed services; and enterprise application software services.
Nevado is a private limited company incorporated in Singapore. Nevado is an indirect wholly owned subsidiary of Temasek. It is an investment holding company and does not have any business operations other than holding investments. It is neither active in India nor has any planned business activities in India.
Temasek, the ultimate parent entity of Nevado, is an investment company based in Singapore. Currently, Temasek (through Andeson Investments Pte. Ltd., a Singapore based private limited company and an indirect wholly owned subsidiary of Temasek) holds ~ 4% passive shareholding in the Target, through a passive limited interest in Turing, and zero voting rights. Temasek’s global portfolio covers a broad spectrum of industries including Transportation & Industrials; Financial Services; Telecommunications, Media & Technology; Consumer & Real Estate; Life sciences & Agri Food; and Multi-sector Funds. In India, through certain portfolio companies of its affiliates, Temasek is present to a limited extent in the provision of IT and ITeS to third parties. At a narrow level, Temasek is engaged in the business of provision of consulting services and application implementation and managed services.
The Target is a publicly listed Delaware corporation, which has an indirect subsidiary in India, namely Thoughtworks Technologies (India) Private Limited. The Target is the ultimate parent entity that controls the operations of Thoughtworks group of entities. Turing^[1] is the current majority shareholder of the Target with shareholding of ~60 % in the Target. AP Funds through Turing holds ~52 % equity shareholding in the Target and ~60 % of the voting rights in the Target and maintains sole control over the Target. The Target is a global technology consultancy corporation, providing IT consultancy and application implementation and managed services. In India, the Target is active in the IT services sector, in particular in relation to IT consultancy and application implementation and managed services.
It is submitted that the AP Funds’ portfolio companies and the Temasek’s portfolio companies active in India have limited activities in the IT and ITeS sector in India. The Target through its subsidiary Thoughtworks Technologies (India) Private Limited is engaged in the business of providing services such as: (a) consultation services; and (b) application implementation and managed services, within the broad IT and ITeS sector in India. Thus, AP Funds’ portfolio entities, Temasek’s portfolio entities, and the Target exhibit overlaps in the following relevant markets: ‘market for IT and ITeS in India’ (IT and ITeS Market) at a broad level; and ‘market for provision of consulting services in India’ (Consulting Market); and ‘market for provision of application implementation and managed services in India’ (Application Implementation Market) at a narrow level. Further, it is submitted that the Parties have no vertical or complementary relationships with respect to their operations in India.
The Commission decides to leave precise delineation of the relevant market open, as it was observed that because of the reasons stated below, the Proposed Combination is not likely to result in appreciable adverse effect on competition, irrespective of the manner in which the relevant market is delineated.
Based on the submissions of the Parties, it is noted that the combined market shares of the Parties in each of the relevant markets identified above is in the range of [0-5] %. Further, there are other players present in each of the relevant markets i.e., IT and ITeS Market, Consulting Market; and Application Implementation Market.
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 sub-section (4) of Section 20 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 may stand revoked if, at any time, the information provided by the Acquirers is found to be incorrect.
The information provided by the Acquirers 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 Acquirers accordingly.
