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The Competition Commission of India approves the acquisition of up to 5.49 percent equity shareholding in Shiprocket Private Limited by KDT Venture Holdings, LLC. The combination involves both primary and secondary purchases of compulsory convertible preference shares and equity shares along with certain rights. The Commission determines that the combination does not cause an appreciable adverse effect on competition in India due to limited market shares and the presence of alternative competitors in overlapping and vertically linked markets. The approval is subject to the condition that the order is revocable if the information provided by the acquirer is found incorrect.
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COMPETITION COMMISSION OF INDIA Combination Registration No. C-2024/10/1196
3rd December 2024
Notice under Section 6(2) of the Competition Act, 2002 given by KDT Venture Holdings, LLC.
CORAM:
Ms. Ravneet Kaur Chairperson
Mr. Anil Agrawal Member
Mr. Deepak Anurag Member
Order under Section 31(1) of the Competition Act, 2002
On 21st October 2024, the Competition Commission of India (Commission) received a Notice under Section 6(2) of the Competition Act, 2002 (Act) given by KDT Venture Holdings, LLC (KDT/Acquirer). The Notice was filed pursuant to the execution of (i) Share Purchase Agreement dated 12th August 2024, executed amongst Shiprocket Private Limited (Shiprocket/Target), KDT, and Bertelsmann Nederland B.V. (Seller 1) (SPA1); (ii) Share Purchase Agreement dated 12th August 2024, executed amongst Shiprocket, KDT, and Nirvana Digital Investment Holdings Limited (Seller 2) (SPA2); (iii) Series E3 Subscription Agreement dated 12th August 2024, executed amongst Shiprocket, Saahil Goel, Gautam Kapoor, Vishesh Khurans, Akshay Ghulati, and KDT (SSA); and (iv) Shareholders' Agreement (SHA) dated 12th August 2024, inter alia amongst Shiprocket, KDT and other shareholders of Shiprocket.
The Proposed Combination entails acquisition by KDT of up to 5.49% equity shareholding (on a fully diluted basis), along with certain rights, in Shiprocket by way of both primary and a secondary purchase of compulsory convertible preference shares and equity shares.
In terms of Regulation 14 of the Competition Commission of India (Combinations) Regulations, 2024 (Combinations Regulations), vide letter dated 4th November 2024, certain information and clarifications were sought from the Acquirer. The response to this letter was submitted by the Acquirer on 12th November 2024. The Acquirer also submitted additional information vide a voluntary submission given on 26th November 2024.
KDT, incorporated in the United States of America (USA), is the investment arm and a wholly owned subsidiary of the Koch Inc. (ultimate parent entity of the Koch/Acquirer Group). KDT is an early-stage venture capital firm that invests in startups in countries/ geographies including the USA, Israel, and the United Kingdom in the healthcare, supply chain & manufacturing, cyber security, semiconductors, connectivity, FinTech, enterprise software, and energy transformation sectors. KDT is present in India only through its portfolio companies which are active in the cybersecurity and healthcare sectors.
Koch Group is a multinational conglomerate in the USA. Its subsidiaries are involved in a variety of industries across the globe, in particular manufacturing, agriculture, pulp and paper, packaging, consumer products, building materials, glass, automotive components, refining, renewable energy, chemicals and polymers, electronics, enterprise software, data analytics, medical products, engineered technology, project services, recycling, supply chain and logistics, global commodities trading, financial data communications, and investments.
Shiprocket, a company incorporated in India, operates a logistics platform whereby it provides logistics services to other businesses, domestically and internationally, through logistics service providers listed on its platform. Apart from this, Shiprocket also offers warehousing and fulfilment services. As a part of the primary offering, Shiprocket also offers certain ancillary and value-added services such as order fulfilment, packaging, marketing, coordinating deliveries, and supply chain management tools/ services. [hereinafter, Acquirer, Acquirer Group and Target are collectively referred to as Parties].
For the purpose of overlap assessment, the activities of the Acquirer Group, Acquirer and Target (including their affiliates) have been considered. Considering their presence, it was observed that an affiliate of the Acquirer Group, namely Infor (India) Private Limited (Infor), exhibits a horizontal overlap with Shiprocket's affiliate, namely Logibricks Technologies Private Limited (Logibricks) in the market for Enterprise Resource Planning (ERP) services1. The Acquirer, however, has submitted that while Infor is engaged in the provision of ERP services for manufacturing entities in India, Logibricks offers a financial reconciliation tool, viz. LogiRecon (which helps in reconciling financial settlements) to merchants selling goods online.
The Commission observed that, considering the nature and extent of aforesaid overlap and the competition assessment given in the subsequent paragraph, the Proposed Combination is not likely to cause a significant change in market dynamics in any of the plausible markets that could be delineated and accordingly, decided to keep the definition of relevant market open.
The combined market share of the Parties (including their affiliates) in the horizontally overlapping market for ERP services, on the basis of value of sales, is in the range of [0-5]%, with the incremental market share being less than 1%. Further, the market segment is fragmented with the presence of several other competitors, besides the fact that the Acquirer Group's affiliate Infor and the Target's affiliate Logibricks provide ERP services to different sets of customers. Therefore, their overlapping presence in this market is not likely to raise any competition concern.
Besides the aforesaid horizontal overlap, there is a linkage that arise because of the presence of Acquirer Group, through its affiliate, Infor, in the market for provision of warehouse management services in India (upstream market) and Shiprocket in the market for the provision of warehousing services in India (downstream market). The downstream market for provision of warehousing services, may be further delineated into the narrow segments of (i) organized warehousing services in India, and (ii) organized warehousing services for ecommerce in India.
The presence of the Parties and/or their affiliates, in the upstream as well as downstream market is limited, as their market share is in the range of [0-5]%, except for the narrow–segment of organized warehousing services for ecommerce in India, in which the market share is in the range of [5-10]%. Given the aforesaid presence of the Parties and/or their affiliates in the vertically overlapping markets, coupled with the presence of other competitors, it appears that the Parties do not possess the ability or incentive to cause foreclosure in any of the aforesaid markets.
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.
The order may be 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 ERP is a type of software used by organisations in managing their daily business activities like accounting, procurement, project management, risk management and compliance, and supply chain operations. A complete ERP suite also encompasses enterprise performance management, planning, budgeting, and reporting/predicting financial results.
