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The Competition Commission of India approves the proposed acquisition of approximately 7.8 percent equity shareholding in Vastu Housing Finance Corporation Limited by Naspers Ventures B.V. The combination involves no direct horizontal overlap between the parties. A relevant affiliate of the acquirer group provides unsecured loans while the target group offers secured loans. The commission finds that the combination creates no appreciable adverse effect on competition in India across any delineated market. The order stands revoked if the information provided by the acquirer is found to be incorrect.
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COMPETITION COMMISSION OF INDIA
Combination Registration No.C-2024/08/1175
17^th September 2024
Notice under Section 6(2) of the Competition Act, 2002 filed by Naspers Ventures B.V.
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
On 16^th August 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 Naspers Ventures B.V. (Naspers Ventures/Acquirer) in relation to a proposed acquisition in Vastu Housing Finance Corporation Limited (VHFCL/Target) [hereinafter, the Acquirer and the Target are collectively referred to as the “Parties”].
The notice has been filed pursuant to Share Purchase Agreements dated 27^th July 2024, Shareholders’ Agreement (SHA) dated 22^nd May 2024, and Deed of Adherence and Amendment Agreement read together with the SHA.
The notice has been filed in relation to the proposed acquisition by Naspers Ventures of approximately 7.8% equity shareholding (on a fully diluted basis) in VHFCL, from different selling shareholders of the Target (Proposed Combination).
In terms of Regulation 14 of Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, communication dated 2^nd September 2024 was issued to the Acquirer seeking certain information(s)/ clarification(s), inter alia, relating to the activities of the Parties and the response to the same was received on 9^th September 2024.
Naspers Ventures is a private limited liability company. It is an indirect, wholly-owned subsidiary of Prosus N.V. (Prosus), which, in turn, is a direct subsidiary of Naspers Ltd. (Naspers). Its principal activity is to make investments by providing direct and indirect equity and debt funding. Naspers Ventures by itself does not undertake any business activity other than holding investments in its portfolio companies, which have business activities in India.
Naspers is a public company listed on Johannesburg Stock Exchange and A2X Exchange in South Africa. It is the majority owner of Prosus, controlling 73.27% of the voting rights of Prosus, representing a 43.34% economic interest. It is a global consumer internet company and one of the largest technology investors in the world. In India, Naspers, through Prosus, has several minority and non-minority investments.
Naspers is the ultimate parent entity of the group to which Naspers Ventures belongs, and includes all Relevant Affiliates1 (Acquirer Group). Through Prosus, the Acquirer group, operates and invests globally in markets with long-term growth potential, building leading consumer internet companies. The Naspers group is focused on businesses in the online classifieds, food delivery, payments and fintech, and education technology sectors in markets including India and Brazil.
VHFCL is registered with the National Housing Bank as a Non-Deposit taking Housing Finance Company (HFC). It is engaged in the provision of loans, home loans, home extension loans, plot and construction loans, construction loan, loans against property, and micro/MSME loans. It has one subsidiary, namely, Vastu Finserve India Private Limited (VFIPL), and does not have any other investments (VHFCL and VFIPL are collectively referred to as “Target Group”). VHFCL does not undertake any business activity outside India.
VFIPL is a Non-Banking Financial Company (NBFC) engaged in the business of providing financial services, specifically - provision of loans and credit/advance money with or without security to any individual, firm, body corporate or any other entity. It is engaged inter alia in the provision of car loans, commercial vehicle loans, tractor loans, construction equipment loan, loans against property, etc.
In relation to horizontal overlaps amongst the Parties, it is submitted that the Proposed Combination does not involve any direct horizontal overlaps between Acquirer vis-à-vis the business activities of the Target and its subsidiary in India. However, a Relevant Affiliate of the Acquirer Group, namely, PayU Finance, an NBFC licensee, is engaged in the provision of unsecured loans and lending services. It provides credit or small ticket unsecured personal loan to salaried and self-employed professionals, not covered by traditional banks, through schemes like ‘buy now pay later’ [via LazyPay Private Limited] and EMI/pay in instalment solutions, etc. whereas the Target and its subsidiary VFIPL are present in the market for providing secured, housing loans, loans against property, vehicle loans, business loans through traditional banking routes.
The Parties have submitted that PayU Finance and the Target offer loan/lending services to customers with different credit profiles and target audience. Nevertheless, the relevant market at a broader level may be defined as “the market for loans and lending services in India” (Broad Market), which, based on the nature of customers to whom the loan is offered and their end-use, may be sub-segmented into “the market for retail loans in India” (Narrow Market). At the narrowest level, the relevant market may be delineated as “ the market for provision of loans to small businesses/MSME in India”, as PayU Finance and Target are engaged in disbursal of small and medium business loans, albeit of different types - while PayU Finance disburses unsecured loans, the Target disburses secured loans.
Further, the Parties have submitted that there are no vertical/ complementary relationships between the business activities undertaken by the Target and Naspers Ventures, including their respective groups. Also, there are no existing supply arrangements between Target and the Acquirer Group.
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 are in the range of [0-5] %. Further, each of the relevant markets are characterized by the presence of other players such as State Bank of India (SBI), HDFC Bank and ICICI Bank in the Broad and the Narrow Market and SBI, Punjab National Bank and Union Bank in the Narrowest Market.
Considering the material on record, including the details provided in the notice filed under sub-section (2) of Section 6 of the Act and the assessment of the Proposed Combination based on the factors stated in sub-section (4) 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 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.
Relevant Affiliates of the Acquirer Group covers entities which satisfy both: (a) the Materiality Thresholds i.e. those entities in which the Parties (and their group entities) hold: (i) direct or indirect equity stake of 10%, or (ii) any right or ability to exercise any right including any advantage of commercial nature with any of the party or its affiliates that is not available to an ordinary shareholder; or (iii) any right or ability to nominate a director or observer in another enterprise(s); and (b) are either: (i) direct investments by the Acquirer Group in Indian companies (including their subsidiaries) or (ii) are investments in investee companies outside of India by the Acquirer Group, where the investee company directly/indirectly has an India centric core business. ↩
