India Business Excellence Fund-IV

Page 1 of 5 COMPETITION COMMISSION OF INDIA Combination Registration No.C-2023/10/1070 12th December 2023 Notice under Section 6(2) of the Competition Act, 2002 filed by India Business Excellence Fund IV 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 20th October 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 India Business Excellence Fund IV (Acquirer) acting through its investment manager MO Alternate Investment Advisors Private Limited (MO Alts) for the proposed acquisition of stake in Niva Bupa Health Insurance Company Limited (Target) [hereinafter, the Acquirer and Target are collectively referred to as ‘Parties’]. 2. The notice has been filed pursuant to a deed of adherence (DOA) dated 11th October 2023 entered inter alia amongst the Acquirer, the Target, Fettle Tone LLP (Fettle Tone) and Bupa Singapore Holdings Pte. Limited (Bupa). This DOA has been entered into pursuant to an investment agreement (IA) dated 11th October 2023 entered into Combination Registration No. C-2023/10/1070 Page 2 of 5 between Target, Fettle Tone and Bupa, and by executing the DOA, the Acquirer has become a party to the IA. 3. The proposed combination envisages the acquisition of approximately 2.85% of the issued and paid-up share capital of the Target, by way of subscription of such equity shares of the Target [Proposed Combination]. 4. In terms of Regulation 14 of Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, the Commission, vide communications dated 6th November 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 13th November 2023. 5. The Acquirer is a scheme of Business Excellence Trust IV, a trust set up under the Indian Trusts Act, 1882, and is registered with the Securities and Exchange Board of India as a Category II Alternative Investment Fund, whose trustee is Vistra ITCL (India) Limited. The Acquirer primarily invests in equity and equity-linked instruments and/or debt and/or mezzanine or other instruments of Indian or India-related companies in India. It is a sector-agnostic fund, providing growth capital to mid-sized companies. The Acquirer does not conduct any business operations worldwide outside of India. 6. The Acquirer is a part of the Motilal Oswal Group, a diversified financial services provider with products/services such as retail and institutional broking, private wealth management, investment banking, lending, private equity, asset management and home finance. The parent company of the Motilal Oswal Group is Motilal Oswal Financial Services Limited (MOFSL). MOFSL is an integrated technology-based Financial Services Sector Organization incorporated in India offering a wide range of services including retail and institutional broking, financial products distribution. MOFSL executes transactions in capital markets/equity derivatives/commodity derivatives/currency derivatives segments on behalf of its clients which include retail customers (including high net worth individuals), mutual funds, institutional investors, foreign institutional investors, financial institutions and corporate clients. Besides Combination Registration No. C-2023/10/1070 Page 3 of 5 stockbroking, it also offers a bouquet of financial products and services like insurance, mutual funds, bonds etc. to its client base. MOFSL is also registered with the Securities and Exchange Board of India as Research Analyst, and with various other bodies/agencies in India like IRDA, AMFI, CERSAI, KRA agencies (CVL, Dotex, NDML, CAMS and Karvy) etc. MOFSL has certain subsidiaries1 incorporated outside India. These entities primarily act as a broker, dealer or distributor for MOFSL and help in garnering orders and distributing research reports pertaining to the Indian markets in the international market. 7. The Target, Niva Bupa, is a standalone health insurance company and registered under the laws of India. It is a joint venture between Fettle Tone and Bupa. As on date, the majority holding company is Fettle Tone LLP, a special purpose vehicle (SPV) set up by True North Fund. The Target does not have any subsidiaries, joint ventures or associate companies. The Target offers insurance policies in the health and travel insurance segment in India. It underwrites primarily health insurance business which includes health indemnity, health fixed benefit (hospital cash, personal accident and critical illness) and travel insurance both to retail and group customers. 8. The Acquirer has submitted that there are no horizontal overlaps or no existing vertical overlaps between the activities of the Acquirer and/or its group companies and the activities of the Target. Competition Assessment 9. With respect to the presence of the Parties, the Commission observed that while the Target engaged in the provision of health insurance products in India, which can be further sub-segmented into travel insurance and other health insurance products in India; the Acquirer Group is present in the market for distribution of insurance products (including the sub-segment of health insurance products) in India, through its affiliates 1 Indian Business Excellence Management Company, Motilal Oswal Asset Management (Mauritius) Private Limited, Motilal Oswal Capital Markets (Singapore) Pte. Limited, and Motilal Oswal Capital Markets (Hong Kong) Pte. Limited. Combination Registration No. C-2023/10/1070 Page 4 of 5 (namely, MOFSL), leading to vertical linkage between the parties. The Target is present in the upstream market for provision of health insurance products in India, and the Acquirer Group is engaged in the downstream market for distribution of insurance products in India. 10. The Commission assessed the Proposed Combination considering plausible relevant markets and decided to leave the delineation of the relevant market open as the Proposed Combination, for the reasons detailed in ensuing paragraphs, is not likely to cause an appreciable adverse effect on competition in any of the plausible alternative relevant markets that could be delineated. 11. Based on the submissions of the Parties, it is noted that the market shares of the parties in all the relevant markets, except in the provision of other health insurance products, is in the range of [0-5]%, both in terms of value and volume. The Acquirer has submitted that the market share of the Target in the market for provision of other health insurance products at upstream level is in the range of [5-10]%, in terms of volume. Further, there are other players in the market for provision of health insurance products (including narrower business segments) at upstream level such as New India Assurance Co. Ltd., Star Health & Allied Insurance Co. Ltd., Oriental Insurance Co. Ltd. among others. In relation to the market for distribution of health insurance products (including narrower business segments) at downstream level, there are approximately 576 corporate agents are registered with the IRDAI. Further, players in the distribution of insurance products generally include brokers such as Marsh India Insurance Brokers Private Limited, PB Fintech Limited, and AON India Insurance Brokers Pvt Ltd; and corporate agents such as ICICI Bank, HDFC Bank, and Axis Bank. Therefore, the Parties do not seem to have the ability or incentive to cause any foreclosure in any of the plausible markets that could have been delineated. 12. Considering the material on record, including details provided in the notice given under sub-section (2) of Section 6 of the Act and assessment of the combination based on the factors stated in sub-section (4) of Section 20 of the Act, the Commission is of the