Manipal Health Systems Private Limited and MEMG Family Office LLP · 31 Jul 2025

[Image omitted. See the official document.]

[Image omitted. See the official document.]

COMPETITION COMMISSION OF INDIA

Combination Registration No. C-2024/05/1142

NON-CONFIDENTIAL

31stJuly 2025

Proceedings under Section 43A of the Competition Act, 2002 (Act) in relation to notice filed under sub-section (2) of Section 6 of the Act by Manipal Health Systems Private Limited and MEMG Family Office LLP

CORAM:

Ms. Ravneet Kaur
Chairperson

Mr. Anil Agrawal
Member

Ms. Sweta Kakkad
Member

Appearances: Mr. Samir Gandhi, Advocate, Mr. Ankit Majumdar, Advocate, Mr. Anicham Tamilnani, Advocate and Mr. Ravi Gangal, Advocate

Order under Section 43A of the Competition Act, 2002

A. BACKGROUND

1. The Competition Commission of India (Commission) in its meeting held on 23rd July 2024 had considered the notice dated 09th May 2024 received under sub-section (2) of Section 6 of the Act filed by Manipal Health Systems Private Limited (Acquirer 1/ MHSPL) and MEMG Family Office LLP (Acquirer 2/ MEMG FO) [Acquirer-1 and Acquirer-2 are together referred to as ‘Acquirers’] and passed an order under sub-section (1) of Section 31 of the Competition Act, 2002 (Act) approving the combination without prejudice to any proceeding under Section 43A of the Act (Order).

   Description of the Parties

2. Acquirer 1: Acquirer-1 is a privately held healthcare company in which Manipal Global Health Services, Manipal Education and Medical Group India Pvt. Ltd. and Acquirer-2 hold shareholding. It provides a diverse range of services, including hospital services, research services, telemedicine, home healthcare, and medical tourism.

3. Acquirer 2: Acquirer-2, incorporated in India, is a limited liability partnership firm and ultimately belongs to the Pai Family Group. Its designated partners include Dr. Ranjan Ramdas Pai and Mrs. Shruti Ranjan Pai and Manipal Education and Medical Group India Pvt. Ltd. It is engaged in the provision of management consultancy services and advisory activities to customers in India and does not have any operations other than in India.

4. Pai Family: The Pai Family comprises Dr. Ranjan Pai, Mrs. Shruti Pai, Ms. Sanya Pai and Ms. Rhea Pai (together referred to as “Pai Family”). The Pai Family is treated as the ultimate parent of the Pai Family Group, including the Acquirers. The Pai Family and Pai Family Group, including through their affiliates, are engaged in (i) running and managing hospitals and providing health care services; (ii) providing management business consultancy and other related services; (iii) providing services in finance, management, administration, legal, human resources development and other related fields; (iv) management and administration of teaching hospitals; (v) operating various hospitals or clinics for providing healthcare services; and (vi) providing educations and related services. It is submitted in the notice that educational institutions operated by the Acquirer Group offer their services primarily in the formal education segment and not in the market for non-formal education.

5. Target: The Target is Aakash Educational Services Limited (Target/AESL). Aakash Edutech Private Limited (AEPL) is the 100% subsidiary of the Target. The Target operates classroom centres (including its franchisee centres) (Aakash Centres) across India. Further, the Target offers its services through multiple modes such as classroom-based coaching, online learning, distance learning and hybrid learning programmes. The Target (directly or through its subsidiary or its franchisees) provides following services: (i) coaching services supplementing their classroom learning curated learning resources for class 8; (ii) preparatory coaching services for junior competitive scholarship tests and merit-based entrance tests, such as Olympiads and NTSE; (iii) coaching services supplementing their classroom learning curated learning resources for class 9 to 10; and (iv) coaching services supplementing their classroom learning curated learning resources for science stream for classes 11 and 12 [hereinafter, the Acquirers and the Target are collectively referred to as the ‘Parties’].

   Transaction

6. The Commission in its Order dated 23rd July 2024 approved the following Combination:

   • i. Acquisition by the Acquirer-1 of 39.61% of the share capital of the AESL, on post issue fully diluted basis, pursuant to the conversion of the debentures to equity shares of the Target in accordance with the Debenture Trust Deed (Transaction-1); and
   • ii. Acquisition by Acquirer-2 of up to an additional [unclear in source] of the share capital of the Target on a post issue basis (or such additional shares as decreed by the arbitral tribunal at the date of transfer) pursuant to the occurrence of an event of default under loan agreement dated 13th October 2023 (Transaction-2).

   Transaction-1 and Transaction-2 are together referred to as the “Combination”. Post the completion of Transaction-2, the Acquirers together would hold up to approximately 48% of the Target’s share capital on a post issue fully diluted basis.

   Submissions in the Notice

   (a) Transaction 1

7. With respect to Transaction 1, it was submitted in the notice that AESL had issued 20,000 debentures of aggregate face value of INR 2000 crore to DKP India Scheme I, an alternative investment fund registered with the Securities and Exchange Board of India, under the terms of the debenture trust deed dated 25th April 2023 as amended on 2nd June 2023 (Debenture Trust Deed).

8. The Acquirer-1 purchased the aforesaid 20,000 debentures by payment of aggregate consideration of INR 1452.60 crores through the CBRICS platform of the National Stock Exchange of India Limited (NSE) on 10th November 2023.

9. Pursuant to various events of default under the terms of the Debenture Trust Deed, and in accordance with the terms thereof, Catalyst Trusteeship Limited (Debenture Trustee), issued a conversion notice dated 15th January 2024 to the Target, calling upon the Target to convert INR 2184.70 crores of the debenture obligations into equity shares of the Target, representing 39.61% of the share capital of the Target on a post issue fully diluted basis in accordance with clause 8.2(g) of the Debenture Trust Deed. Theshareholders of the Target approved this conversion through the Special Resolution dated 25th April 2023.

10. As to the date of special resolution being prior to date of conversion notice, it was clarified that along with the execution of the Debenture Trust Deed, the shareholders of the Target had also passed a special resolution on 25th April 2023, to enable its board of directors to effectuate the conversion of shares as contemplated therein, in the event a default was to occur in the future.

11. Further, regarding date of default under the terms of the Debenture Trust Deed, it is submitted that a demand notice was issued on 7th September 2023 from the Debenture Trustee to Think & Learn Private Limited (T&L). Pursuant to the event of default and acceleration dated 26th June 2023, from the Debenture Trustee, inter alia, the Target was called upon to forthwith pay and repay the entire debenture obligations with respect to the Series A Debentures and Series B Debentures. Therefore, the date of default was 26th June 2023 pursuant to which the conversion notice dated 15th January 2024 was issued.

12. Pursuant to the conversion notice dated 15th January 2024, the Target allotted equity shares to the Acquirer-1 on 22nd January 2024 representing 39.61% of the share capital of the Target on a post issue fully diluted basis (Transaction-1).

(b) Transaction 2

13. It was stated in the notice that, apart from above, the Acquirer-1 and other entities of MEMG Group (namely, Manipal Health Initiative Private Limited, MNI Ventures, and MEMG FO) had disbursed loans to AESL and its related entities (collectively, the “Loan Agreements”).

14. With respect to Loan Agreement dated 13th October 2023 (LA-3), it is stated that this Loan was provided as an advance payment for the purchase consideration towards purchase of equity shares of AESL amounting to [unclear in source] ownership (at the time of the loan) of the Target (Sale Shares). However, these equity shares amounting to [unclear in source] (at the time of the loan) in the Target were not transferred to MEMG FO. Further, LA-3 also gave MEMG FO the right to receive additional [unclear in source] of equity shares of AESL (Additional Shares).

15. Due to non-payment of the outstanding amounts by the specified date with respect to LA-3, Acquirer-2 issued a notice on 18th March 2024 referring the dispute to arbitration seated in Bangalore to be conducted in accordance with rules of the Singapore International Arbitration Centre (SIAC), seeking transfer of Sale Shares and Additional Shares. By way of an interim order dated 4th April 2024 (SIAC Interim Order), the arbitrator has restrained the sellers from disposing or encumbering Sale Shares of AESL until further orders in these arbitration proceedings.

16. Accordingly, in addition to the shares already acquired (39.61%) pursuant to the Transaction-1, Acquirer-2 sought approval for the acquisition of up to an additional 8.25% equity shares of AESL’s share capital (or such additional number of shares as decreed by the arbitral tribunal at the date of the transfer) (Transaction-2).